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Economic contribution of small businesses in Olmsted County

Key findings for communities

Downtown business open sign

Employment: One in three Olmsted County employees work for a small business. In 2016, businesses in Olmsted County employed 95,917 people. An estimated 37,779 (39 percent) are at businesses with fewer than 100 employees. An estimated 48,243 (50 percent) are at businesses with fewer than 250 employees.

Output: In 2016, businesses (including agriculture and government) in Olmsted County generated $18.9 billion dollars in output. Businesses with fewer than 100 employees generated 27 percent of total output ($5.0 billion). Businesses with fewer than 250 employees were responsible for 35 percent, or an estimated $6.7 billion.

Labor income: In 2016, businesses in Olmsted County spent $7.5 billion on labor income. Small businesses with fewer than 100 employees in the county paid an estimated $1.9 billion to their employees in 2016 or about 25 percent of the total. Businesses with fewer than 250 employees paid an estimated $2.4 billion, or 32 percent of the total.

Taxes: Businesses with fewer than 100 employees paid an estimated $271.4 million in state and local taxes in 2016. A major component ($114.5 million) was state sales tax. They also paid an estimated $74.0 million in local property taxes.

Contribution of expanding small businesses: Increasing small business sales by 5 percent ($251.9 million) would increase total economic activity in Olmsted County by an estimated $359.6 million. It would add an estimated 2,800 jobs and $129.6 million in labor income.

About this report

Small businesses are an important element of the economies in Rochester and Olmsted County, Minnesota. When considering the Rochester area economy, many people think of large companies such as the Mayo Clinic, IBM, or Charter Communications. However, businesses with fewer than 250 employees account for 99.8 percent of all establishments in the county.

The Rochester Area Chamber of Commerce recognizes the important role small businesses play in the local economy. It commissioned the University of Minnesota Extension to quantify the economic contribution of small businesses in the county and to illustrate how increases in purchasing from — and by — these businesses can affect the local economy. Using data from the County Business Patterns and IMPLAN, Extension estimated employment, output, labor income, and taxes generated by small businesses, as well as the impacts of increased local purchasing.

These results are estimates based on County Business Patterns and IMPLAN. Unless noted, self-employed, government, and agriculture are not included in the dataset.

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Authors: Brigid Tuck, senior economic impact analyst; Jennifer Hawkins, Extension educator

Reviewed in 2019

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