by Dr. Patrick Jones
Measured by the number of firms, most local economies are characterized by a large number that are very small. Trends indicator 1.2.6 shows this clearly for Walla Walla County. It tracks the number of very small businesses, those with 1-9 employees.
Strictly speaking, the count refers to any employer, private or public. In other words, the indicator covers non-profits and governmental agencies, whether federal, state or local.
At the highest level of aggregation, an economy’s various organizations (firms or government) are organized into 20 sectors. We don’t know the distribution of very small employers, however, into these sectors for Walla Walla. But we can take an educated guess on those that might contain high counts via data from the Washington Department of Employment Security’s Census of Employees & Wages.
Those sectors with the smallest average employee numbers per firm in the county are construction (5); real estate offices (4); professional, scientific & technical services - essentially, white collar professionals (4); and administrative services - security, janitorial, landscaping (5).
Dipping into sector detail, it’s worth noting the average employee size in some well-known local industries show beverage manufacturing at 9; insurance carriers at 8; social assistance – eldercare and childcare services at 4; and accommodations, at 7. Conversely, there are several sectors where the average head count is much higher: food manufacturing, machine manufacturing, hospitals, federal government agencies and local governments (including school districts).
Walla Walla’s economy typically has sported slightly higher shares of small businesses among all employers than elsewhere. As the graph illustrates, the County’s share has been two to three percentage points higher than the state average. Until 2023, that is. The past two years have shown Walla Walla with little difference in its small business profile from the state. Why?
Entries for 2023 and 2024 are, at first glance, puzzling. The numbers dropped by 500 and 600, respectively, from 2022, the peak year for very small businesses. Conversations with the regional labor economist, Ajsa Suljic, pointed to the answer: a re-classification, a not unknown occurrence in economic data. Apparently, several hundred individuals in the county offering home healthcare on their own have been taken out of the data series because they have no employees.
This correction was also done state-wide. We have, unfortunately, no way of eliminating these “firms” from the data in prior years, here or statewide. As a result, an abrupt change in the latter two years for levels of employers now characterizes this measure in the Trends.
While the absolute number of small employers here fell dramatically, the share of these employers of all county employers followed the same track as the one statewide. As of 2024, the rates of the state and county are the same, at a little greater than 76%.
In other words, Walla Walla is now no different than Washington state in the size of the employer pie that is taken by very small employers (firms or agencies).
While the small employer share is high here, that is not the case when the number of workers is considered. In 2023, very small businesses, or employers generally, in Walla Walla claimed only 13% of the total workforce. Mid-sized employers (10-99) accounted for one third of the total workforce. Large employers (100+), or at least those large for Walla Walla, took up the remainder, at 48%. In this last group, organizations with a staff of 1,000 or more made up 23% of the overall total.
Very small businesses are important in many ways, sometimes representing a rapidly growing new firm, more often a family enterprise, and usually populated by engaged citizens. But they have a relatively small effect on the total workforce. This is true here and in most counties in the state. That said, by their sheer numbers, their leaders contribute significantly to the fabric of business and civic life.