Companies with 50 or More Employees Account for 56% of Local Establishments

In Puerto Rico, small- and mid-sized businesses (SMEs), defined as companies with 49 employees or fewer, play a crucial role in the economy. Over the last three years, these SMEs have created a remarkable 44% of private sector jobs, leading to the establishment of an impressive 7,500 new businesses, as confirmed by the Puerto Rico Economic Development Bank (BDE, in Spanish).

BDE President Luis Alemañy stated, “In the last three years alone, more than 7,500 SMEs emerged, predominantly within sectors such as retail, health services, professional services, and the restaurant and hospitality industries.” This robust growth reflects a dynamic entrepreneurial environment that is vital for local economic resilience and employment.

According to the most recent data available for the first quarter of 2024, companies that employ 50 or more individuals constitute 56% of all local establishments. This statistic underscores the significant role larger employers play in the overall employment landscape of Puerto Rico.

The Importance of SMEs in Puerto Rico’s Economy

Moreover, a staggering 96% of private establishments in Puerto Rico are classified as SMEs. These small enterprises are predominantly found within the retail trade, which is where the majority of jobs are also generated. Alemañy added, “This large concentration of SMEs demonstrates their essential contribution to job creation and economic activity across the island.”

Interestingly, SMEs are particularly concentrated in businesses with fewer than five employees, which account for a total of 30,438 companies employing approximately 54,185 workers. This segment alone showed a substantial growth rate of 6.4% in the number of establishments and a 3.2% increase in jobs, as reported by the agency.

Following this group, there are establishments with five to nine employees, totaling 9,773 businesses and providing jobs for 64,132 individuals. This demographic has demonstrated a slight increase of 0.2% in the number of businesses and a 0.6% rise in employment. In terms of the third tier of SMEs, businesses that employ between 10 and 19 workers number around 6,283, contributing significantly with 83,679 jobs and experiencing a 1.5% growth in the number of establishments and a 2.1% increase in employment rates.

Lastly, establishments with 20 to 49 employees represent 4,220 businesses that support 126,807 jobs, exhibiting a 3.5% boost in the number of establishments and a 4.8% increase in jobs. These figures collectively portray a thriving ecosystem of SMEs crucial for job diversity and economic stability in Puerto Rico.

Detailed Breakdown of Employment in 2024

In the first quarter of 2024, Puerto Rico boasted a total of 53,088 private establishments. Within this number, 30,438 had fewer than five employees, while 9,773 comprised five to nine employees; 6,283 had 10 to 19 employees; and 4,220 hosted 20 to 49 employees. Notably, 2,374 establishments employed 50 or more workers, which corresponds to 4% of the total number of private establishments.

“To sum up, smaller companies, each with fewer than 50 employees, account for a remarkable 50,714 establishments, making up 96% of all companies in Puerto Rico. However, this dynamic shifts when we consider the landscape of covered private employment, based on the latest data from the Quarterly Census of Employment and Wages (QCEW),” Alemañy explained.

As of the first quarter of 2024, the private sector encompassed an average of 744,825 jobs. Out of these positions, 328,803 jobs (44%) were found within establishments employing fewer than 50 individuals, while 416,022 jobs (56%) were within larger organizations with 50 or more employees.

The Shift in Self-Employment Trends

Moreover, the Puerto Rico Trade & Export Co., a branch of the Department of Economic Development and Commerce (DDEC, in Spanish), identifies self-employed individuals as part of a distinct category called microenterprises. In the previous year, the average number of self-employed individuals was about 192,000—representing a 0.5% decrease from 2022, when the figure was 193,000. Interestingly, during the first seven months of 2024 (January to July), the self-employed population averaged around 200,000, indicating an increase of 10,000 in comparison with the same timeframe of the previous year, as reported by the Puerto Rico Department of Labor and Human Resources’ Labor Statistics Bureau.

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