Small businesses provided more than 3.2 million jobs in New England in 2023, accounting for more than 47.5 percent of the region's total employment, according to a new regional brief published by the Federal Reserve Bank of Boston. Despite a slight downward trend in their share of total employment over the past two decades, these firms—defined as businesses with fewer than 500 workers—contributed 89.9 percent of net job creation in the region from 2000 to 2023. The brief examines how small businesses anchor local economies across New England's six states, drawing on data from the US Census Bureau's Business Dynamics Statistics through 2023.
The employment concentration in small firms is especially pronounced in rural areas and varies dramatically by state. Vermont had the country's third highest share of workers employed at small businesses in 2023, with small firms accounting for 63 percent of the state's employment and businesses with fewer than 20 workers providing more than 25 percent of jobs. Fourteen of the region's 68 counties had more than 30 percent of their total employment at very small firms in 2023, compared to a national rate of 16.7 percent. Five of the six New England states—excluding Massachusetts—exceeded the national employment share for all three small business firm sizes (1 to 19, 20 to 99, and 100 to 499 workers) in 2023. In every county in Vermont, Maine, and Rhode Island, the employment share of businesses with fewer than 20 workers was higher than the national share. Just over 82 percent of businesses in New England employed fewer than 20 workers in 2023, with the majority of those employing very few or just a single worker.
The report finds that "small businesses occupy a position of economic and civic importance in New England that is not captured by any single statistic," serving as employers who "anchor local communities, supply large institutions with goods and services, and are incubators of regional innovation and job growth." Throughout the 2000–2023 period, small businesses drove job creation in both the region and the country, while firms with 5,000 or more employees annually lost jobs, contributing negatively to employment growth. The authors note that much of the job creation by small businesses has come from young, rapidly growing firms that are small only because they're new, citing studies showing that age, not size, is the attribute driving job creation and that these young businesses eventually become larger firms with more stable headcounts.
The report's analysis reveals important sectoral shifts and persistent challenges facing small business owners. In health care and social assistance—among the largest employers in New England—small businesses play an outsized regional role, with firms of 20 to 499 workers accounting for more than 19 percent of the sector's employment in 2023, up from about 16 percent in 2020. The increase reflects small businesses' growing foothold in a sector that has been one of the driving forces behind national employment growth in recent years. Counties where small business employment shares fell below the national rate typically include urban centers like Boston, Worcester, Hartford, or New Haven, where large corporations are headquartered, or areas home to large institutions like Dartmouth College and Dartmouth–Hitchcock Hospital, which skew the firm-size distribution.
Small business owners' concerns have shifted dramatically in recent years, particularly around inflation and insurance costs. In 2022, inflation was the top concern for more than 30 percent of small business owners in both New England and the United States, according to survey data from the National Federation of Independent Businesses. By summer 2025, those shares had sharply declined to about 10 percent in New England and 12 percent nationally, while concerns about the cost or availability of insurance—including employee health insurance and general liability coverage—spiked modestly in the region and to a lesser degree nationally. The report notes that insurance has "persistently been top of mind for a sizeable share of small business owners in New England" since 2000, with a larger share of the region's business owners consistently citing this concern as their most pressing one compared to owners across the country. The data suggests that while inflation fears have eased, structural concerns about insurance costs remain a defining challenge for the region's small business community.