By Terry L. Besser
Assistant Professor and Extension Sociologist
Iowa State University
Employment opportunities are a critical part of the arithmetic people use to decide where they want to live. Thus, more knowledge about work in small town businesses will help communities design strategies to keep offspring in the community and attract new residents. Information presented here about small town employers was gathered from telephone interviews with 820 randomly selected business owners and managers in 30 Iowa small towns in 1995. This group of businesses employs a total of 8,361 employees.
Part-Time Jobs Outnumber Full-Time Jobs
Of all the 8,361 jobs provided by this sample of businesses, more than half (53 percent) are part-time jobs. Retail, service and agricultural businesses are most likely to offer part-time employment. In retail firms, two out of three jobs are part-time (66 percent), 59 percent in service and 55 percent in agriculture. Transportation and manufacturing companies employ, on the average, the largest percentages of full-time employees (71 percent and 69 percent respectively).
Benefit Coverage Is Lower Than National Averages
There is a great deal of variation in the benefits offered to workers based on the type of business. On the high end, 84 percent of wholesale businesses and 75 percent of agricultural businesses offer health insurance coverage for full-time workers. Retail and service establishments are at the bottom with around half of these firms providing health benefits to full-time employees. In general, the benefits provided to full-time workers by Iowa small town businesses are less than those offered by similarly sized businesses across the country. Almost 60 percent of Iowa small town businesses offer health benefits. The national figure is 66 percent. As for retirement benefits, the comparison is 34 percent in Iowa small towns and 42 percent nationally, and for paid vacation, it is 53 percent in the small town businesses and 88 percent nationally.
Coverage of part-time workers in the Iowa sample is significantly lower than benefits for full-time employees: 9 percent of firms offer health benefits, 9 percent retirement, 20 percent paid vacations and 12 percent sick leave. The low health and retirement benefits coverage provided by many categories of rural businesses, as well as the lower coverage for part-time employees is cause for concern.
Job Security and Satisfaction
How secure are the jobs in small town businesses? Firms that have experienced more success, have added employees and are older should be more stable places to work. On this basis, small town businesses offer fairly secure employment situations. The average age of businesses is 28
years, ranging from an average of 51 years for manufacturers to 24 years for agricultural firms. Small town business employers have added an average of 30 percent more workers to their labor force between 1990 and 1995, and almost 8 out of 10 owners and managers judge their business to be successful or very successful.
If employees are satisfied with their jobs, they will be less likely to quit. This is especially true when they have opportunities for other employment as has been the case for the last couple of years in Iowa. Therefore, job satisfaction was determined by dividing the number of employees who voluntarily left their job in the last year by the total number of employees in a business (the turnover rate). The average small town employer lost one of five employees who quit work in the last year (20 percent turnover rate). The kinds of businesses with the highest average turnover rates are construction (35 percent) and retail (28 percent). The lowest were in finance, insurance and real estate (7 percent) and manufacturing (8 percent).
Unfortunately, this study did not provide information about wages paid to employees. However, data from The Bureau of Economic Analysis shows that in the Iowa manufacturing sector, annual 1995 wages for employees in non-metropolitan locations averaged $32,823 compared to the metropolitan average of $41,403.
Most Jobs Are in Small, Locally Owned Businesses
Nine of every ten jobs with small town employers are in locally owned businesses. As might be expected, the majority of jobs are in retail (36 percent) and service (24 percent) businesses. The Small Business Administration classifies any business with 500 or less employees as small. With that definition, businesses in Iowa small towns are not just small, they are super small, averaging 10 employees each. Almost half of employees work in businesses with 20 or less employees. Two out of three work in businesses with 50 or less employees. The smaller employers are less likely to offer benefits than the larger firms and less likely to provide full time employment.
Implications
The significant number of employment opportunities available in firms of 20 or less employees (almost half) suggests the value in focusing attention on the smallest employers. This must be coupled, however, with recognition of the limited resources possessed by many in this group. New ideas and creative strategies are necessary. Possibilities include collaboration among businesses or public/private partnerships to provide more lucrative employee benefits (especially health and retirement benefits); employee training, information and technology sharing to improve worker productivity; and the pooled provision for childcare.
Considering the impact of employment opportunities on the overall vitality of a community, and considering the large proportion of employment opportunities represented by very small firms, improving the work conditions at these businesses is an important matter for community development.
Contacts:Terry L. Besser, ISU Extension Sociology, (515) 294-6508
Del Marks, ISU Extension Communication Systems, (515) 294-9807
