Large and midsized companies are only 4 percent of all businesses on Long Island, but together they employ more people, have bigger payrolls and post higher sales than small businesses here, according to new U.S. Census Bureau data.
These large and midsized companies, defined as having 100 or more employees, had a total workforce of 596,100 in 2012. That’s 56 percent of the 1.1 million private-sector jobs in Nassau and Suffolk counties.
These 3,200 firms also paid more in wages than small businesses, which New York State defines as having fewer than 100 employees.
Large and midsized companies paid out $32 billion in 2012, compared with a combined payroll of $21 billion for the Island’s 83,340 small businesses.
“The fact that there are so many small businesses does not necessarily mean that their economic activity outweighs the activity of the larger businesses,” said Richard Vogel, dean of the Farmingdale State College business school.
The Census data are striking because politicians and chambers of commerce have called small firms the region’s “future” ever since the end of the Cold War sparked massive downsizing by Northrop Grumman Corp. and other defense contractors, starting in the 1990s.
Experts said the 2012 data, which are the most recent available, point to a more complex, durable business ecosystem, where large companies provide economic clout, small businesses provide balance and both groups often interact.
“Having a diverse group of businesses gives Long Island’s economy a little more stability, because you aren’t putting all of your eggs in one basket,” said John A. Rizzo, chief economist for the Long Island Association, the region’s largest business group.
The Census Bureau’s 2012 Statistics of U.S. Businesses, which were revised in February, reveal:
- Large and midsized companies on the Island had receipts of $150 billion, or 57 percent of the total for local businesses.
- There were 1,830 large companies, defined as having 500 or more workers. They represent 41 percent of all private-sector employment, or 435,800 jobs, and 42 percent of wages paid, or $22 billion.
- There were 1,360 midsized firms, defined as having 100 to 499 workers. They represent 15 percent of all private-sector employment, or 160,300 jobs, and 18 percent of wages, or $9 billion.
- Employee pay, on average, was higher at large and midsized firms: $53,230, compared with $44,460 for small businesses.
- Most of the Island’s 86,500 firms, 89.5 percent, have fewer than 20 employees.
- Small businesses had a combined workforce of 477,160 in 2012, or 44 percent of the total.
Economists said larger companies have the capacity for higher sales and employment in total, relative to small businesses, because they serve markets beyond Long Island.
Larger businesses “often work on long-term contracts, large-scale projects,” said Vogel, the business school dean. “Small businesses don’t necessarily have steady customers and are constantly on the hunt for new ones.”
There’s also “interdependency” between small businesses and larger ones, said Jim McCann, founder and board chairman of 1-800-Flowers.com, based in Carle Place. Larger companies often get their supplies and services from small firms.
1-800-Flowers is among Long Island’s best known public companies. McCann started the business 40 years ago with the purchase of a Manhattan flower shop. It now has yearly sales of $1.1 billion and 4,500 employees, including about 400 at its local headquarters.
The Manhasset resident has been vocal about how Long Island’s high costs and suburban lifestyle present hurdles for large businesses, such as 1-800-Flowers, and the employees they want to hire.
Previously, McCann has said that 1-800-Flowers’ headquarters is still here because he and his brother, the president, are from the area, and because New York City attracts the technology workers that the company needs.
“Long Island is in the circumstance of trying to retain companies. . . . When was the last time a company of some size moved here?” McCann asked.
“Local governments ought to be focused on the things that young employees are looking for -- apartments in vibrant downtowns that are near to work and to a train station, so they can be in the city for socializing at night,” he said.
McCann praised Mineola and Patchogue for backing transit-oriented developments that appeal to young people. But he said some municipalities still oppose alternatives to the single-family home.
“If you make it expensive to be here, and not give me any of the other things that are important to my community, then you are chasing me away,” McCann said.
Canon, the Japanese camera and imaging giant whose Americas headquarters is in Melville, is an example of a large employer that state and local governments managed to keep on the Island, thanks to about $100 million in incentives.
Government officials and real estate executives are focused on such large employers to ensure they don’t leave for lower-cost areas.
Canon executives said they place a priority on their employees’ quality of life.
Joe Warren, general manager of corporate human resources for Canon U.S.A., said it depends on job applicants and employees finding Long Island to be an attractive place to work and live.
He said the region’s 18 colleges and universities are an important source of talent for the company.
Canon has added 175 people since opening the $500 million Melville office three years ago; 1,575 now work there. “We are continuing to expand,” Warren said.
Experts disagreed on how Long Island recovered from the loss of thousands of defense-industry jobs. Some credited big companies, such as Canon and Northwell Health (formerly the North Shore-Long Island Jewish Health System), with keeping the region’s economy on track.
Others, such as state Comptroller Thomas DiNapoli, credited the numerous small firms in Nassau and Suffolk. He said small businesses appear — based on the experiences of his family and friends in the area — to have done far more.
Last month, he released a report showing that Long Island, based on census data, has the highest share of companies with fewer than 20 employees among the state’s 10 regions. New York City was second, followed by the Hudson Valley.
“My belief is that small businesses have picked up a great deal of the slack that was created after some of the big players left the scene” on the Island, said DiNapoli, who lives in Great Neck Plaza.
Lou Basso, a volunteer lobbyist for the National Federation of Independent Business, had a front-row seat to the defense downsizing.
When Grumman and others no longer needed him to find them engineers, he and a partner founded Alcott HR, a provider of benefits and human resource services to small businesses with a combined 6,000 workers, one third of them in Nassau and Suffolk.
“Small businesses are the engine of the economy because they are here to stay,” said Basso, who has 45 of his 75 employees on the Island. “Maybe they don’t have as many people, but the larger companies have a tendency to go.”
Long Island has lost several large companies in recent years, including Arrow Electronics Inc., American Home Mortgage Investment Corp. and OSI Pharmaceuticals Inc.
Advocates for small businesses said their contributions are particularly evident in downtowns.
Ree S. Wackett, a senior business adviser for the Small Business Development Center at Stony Brook University, said small firms provide critical services to consumers, such as automobile and home repairs, nail care, landscaping, snow removal and dry cleaning.
The Census figures don’t include jobs held by Long Islanders working in New York City or other states. They also don’t cover employment in agriculture and government.
The numbers represent employment, sales and payroll by company size for 2012. Census officials said companies with facilities in both Nassau and Suffolk were probably double counted in terms of the total number of firms on the Island but not in terms of employment, sales or payroll.
The data show Long Island is somewhat less reliant on larger companies than New York State or the United States.
Larger businesses accounted for roughly 65 percent of private-sector jobs in the state and country, a higher share by 9 percentage points than in Nassau and Suffolk.
In terms of payroll and sales, larger firms represented about 73 percent in the state and country, 15 percentage points higher than on the Island.
“Long Island has never had one huge employer; we’ve always had a lot of small manufacturers and service companies,” said Howard Kipnes, owner of Cedar Knolls Inc., a small contractor of modular homes based in Ronkonkoma. He also is a former president of the Hauppauge Industrial Association, which represents companies of all sizes.
“Small businesses are primarily service-oriented and are on the backbone of the bigger industries,” Kipnes said. “But we need everyone . . . all of the spokes in the wheel of the economy have to be turning together for Long Island to work.”