SMALL BUSINESS PERSONS AND EGALITARIANISM
Small business persons have every reason in the world to desire an egalitarian revolution in the United States. Their lives in an egalitarian society (as described on this website) would be improved in terms of both their material standard of living and their emotional well-being. Here's why.
First, let's see who exactly we're talking about with the phrase "small business person." A Forbes Magazine article, "16 Surprising Statistics about Small Businesses," reports that while the Small Business Administration defines a small business as one having fewer than 500 employees, of the 28 million such small businesses in the United States, a whopping 22.5 million (80%) are run by self-employed persons with no additional payroll or employees.
From the US Census report on employment size of firms, we see that out of a total of 27.3 million firms with fewer than 500 employees, 25 million (91%) had fewer than 5 employees and 26.6 million firms (97%) had fewer than 20 employees (as of 2008). Thus the overwhelming majority of small business persons are either self-employed with no employees (80%) or with only one to four employees (91%). Only 3% of small businesses employ more than 20 employees.
How much money do small business owners make? Most don't make very much. One source states that, "In 2008, the average nonfarm sole proprietorship had revenues of only $58,256 and net income of only $11,696." According to the Forbes article, the average annual revenue of self-employed (no employees) businesses was only $44,000, of which the business person's take home income was necessarily only the part remaining after costs of running the business were covered by this revenue. 80% of these "nonemployer" businesses had annual revenues less than $50,000.
This source reports on the incomes of what most people have in mind by the phrase "small business owners"; it describes these "everyday" small business owners this way:
"These are the everyday businesses that don't interest VCs [venture capitalists] and other investors who look for big paydays. They have fewer than 20 employees, and for the most part have fewer than 10 employees.
"These everyday businesses are software developers, electrical contractors, freelance writers, salvage companies, bagel store owners, consultants, automotive parts dealers, pet store owners, Internet publishers, accountants, small manufacturers, and well, the list goes on. They are the small businesses in your town or at the local strip mall. They are the homebased businesses in your neighborhood or maybe your own basement. And they are the businesses in the local industrial park or office building downtown. They generate income, but not big bucks.
"For the most part, these small businesses have few employees. According to US Census Bureau statistics, while there are more than 27 million businesses operating in the United States, only 655,587 of them employ 20 or more employees.
"In fact, the majority of US small businesses are very small. A whopping 21 million are "nonemployers." In other words, they are self-employed individuals who pay taxes, but are not counted in the monthly jobs reports that are based on payroll data because they do not have a payroll.
"Another 3.7 million have 1 to 4 employees."
A Better Standard of Living
The pie chart in this article cited above gives the 2010 household annual incomes of these "everyday" small business owners. It shows that 91% of them made less than $150,000 and 59% made less than $75,000. To put this in perspective, consider that the total U.S. personal income in 2010 was $12.31 trillion and the U.S. population that year was 308.7 million. Doing the division yields a per capita (what every person--man, woman and child--would have if each had exactly the same) income of approximately $40,000. This means that had there been an egalitarian distribution of income in 2010, a family of four would have had an income of $160,000 that year, $10,000 more than the income of 91% of the households of the "everyday" small business owners described above.
In terms of very narrowly defined (i.e., income) material standard of living we see that the great majority of small business owners would actually be better off in an egalitarian society than they are in the present one. But their lives would be better in even more important respects, because of the fundamental difference between an egalitarian society and our present one.
Small business owners--especially when there are no other employees--often work far more hours per week (and per year) than most people would consider reasonable. In an egalitarian society they would share equally in the wealth of society while only being expected to work a reasonable amount.
Greater Emotional Happiness
Many small business owners today try to make the business one in which the employees are treated fairly and feel "part of the family." But the need to turn a profit and compete with other businesses makes this very difficult. The owner is caught between a rock and a hard place: provide good health insurance to the employees and go out of business, or deny good health insurance in order to stay in business. What a choice! What a recipe for emotional distress to the owner, not to mention the employees. This dilemma would vanish in an egalitarian society.
In an egalitarian society, in contrast, former small business owners who had hired employees would enjoy a much more friendly relationship with the other workers in the business. Why? Because the workers in any enterprise would be equals with respect to formal status in decision-making and standard of living. (Informally, those with greater knowledge and experience and skill would command greater respect for their opinions, of course.) All of the workers would share a common desire for their enterprise to have a good reputation in the larger society so they can maintain their membership in the sharing economy (which enables them to take what they need from stores for free or, in the case of scarcity, have the same chance as others to obtain what is rationed according to need.) The business would be about providing a service to the society, and its workers enjoying, in consequence, the right to share in the wealth of society according to need. No longer would a particular person--the former owner--need to get the other workers to work more for less pay in order to make the business turn a profit. All of the old antagonism and resentment that was generated by this conflict of interest would vanish. This gain in emotional happiness is priceless.
Postscript January 13, 2014: Here is a comment on this article left to me (this website's editor) on Facebook:
"John, I spent 30 years as owner of a small contracting business with up to twenty employees. You hit the nail on the head regarding small business life. I thought very often over the years about the false perceptions that are perpetrated regarding the efficiency of the competitive, dog eat dog system I operated within. There is a huge regulatory (policing) apparatus required to attempt to rein in the actions businesses take in their attempts to compete and survive. HR conflicts are constant, struggling to find affordable health care each year. Attempting to navigate federal, state, local and private rules and regulations and bidding requirements required a staff of employees in itself - and this is all tied to competition. I often wondered what a true accounting of the overhead burden of a company would reveal about just how efficiently products and services are produced and delivered in our capitalist system. As much profit driven regulation as there already is, much more is needed to attempt to protect the environment and for many other reasons - all because of the profit motive. Replacing the narrowly focused, profit driven system with a resource based, non monetary one is critical to the future of the whole planet. Many small business persons become consumed in an unhealthy way, in their attempts survive while being fair with employees, customers and themselves."