Economists Find Microbusinesses Growing in Economic Importance in Maine

September 9, 2009 Cooperative Extension

Contacts: Jim McConnon, 581-3165 or Todd Gabe, 581-3307

ORONO — New research by University of Maine economists shows that the smallest of small businesses — micro-enterprises with up to four employees — have a significant economic impact on state and even national economies. And those very small businesses in Maine are leading New England in growth.

Between 2003 and 2007, the number of micro-businesses, which includes sole proprietors, in Maine grew 9.3 percent, while businesses with five or more workers grew by 4.6 percent. The number of microbusinesses in New England grew by 6.3 percent. The researchers also found that, during this period, micro-enterprise employment in Maine increased by 8 percent, while employment in businesses with five or more workers grew about 3 percent.

There are 142,984 micro-enterprises in Maine employing 183,138 people. The researchers found that 22.3 percent of Maine workers were employed by micro-enterprises in 2007, up from 21.3 percent in 2003, compared with the New England leader, Vermont, where 23.1 percent of the workforce was employed in a micro-enterprise. Nationally, micro-enterprises represented 18.6 percent of the employment base, the researchers found.

The number of micro-enterprises per capita in Maine was 10.9 percent during the period studied by UMaine Extension specialist and professor of economics James McConnon, graduate research assistant Sarah Larochelle and UMaine School of Economics professor Todd Gabe. Vermont’s micro-enterprises, meanwhile, represented 12 percent per capita. The nationwide number was 8.6 percent, and regionally, it was 9.1 percent in the New England states.

According to McConnon and Gabe, there are more than 26 million micro-enterprises, operating in the United States. They represent 18.6 percent of all private employment and about 87 percent of all businesses in the country.

Information on the number of micro-businesses and micro-business employment by county in Maine and for the New England States is available online.