Where Do Small Business Employees Make the Most?

Across the country, the economic recovery of the last several years has allowed many small businesses to hire more workers and repeatedly give raises to those they already had. However, it stands to reason that some parts of the U.S. will have improved more than others, and therefore small business employees in some states continue to make more than others.

The state that had the largest average small business employee salary by far wasn’t a state at all: The District of Columbia, according to a new study by the consumer finance site Nerdwallet. There, the average employee made more than $63,000 annually, putting it well above second-place New York, where workers earned an average of slightly more than $52,000 per year. Connecticut and Massachusetts – at slightly less than $51,000 and slightly more than $50,000, respectively – were the only other states to climb north of the $50,000 mark. Fifth-place California had average salaries of nearly $48,000.

Often, these numbers were skewed somewhat by specific industries in specific states, the report said. For instance, the single largest average annual salary collected by small business workers was in California’s arts, entertainment, and recreation industry (likely a result of Hollywood paychecks), at nearly $277,600 per year. Likewise, the finance and insurance industries in New York and Connecticut occupied spots Nos. 2, 3, and 5 through 7.

Other breakdowns
Meanwhile, it was also important to note that, in general, the larger the company, the more employees got paid, the report said. This actually isn’t true of the smallest enterprises, with between zero and four employees, as the average worker there made more than $38,700 per year (though this would likely be skewed significantly upward by one person – the owner, for example – having a much larger salary than the other workers).

Otherwise, there was a fairly natural progression, the report said. Companies with between five and 19 workers had average salaries of about $35,800, while those with between 20 and 49 paid those workers close to $38,900 apiece on average. Finally, companies with between 50 and 99 employees paid their workers an average of nearly $41,800.

Small business owners who want to free up more cash to pay employees might want to consider starting with finding more affordable small business insurance. For instance, cutting costs for liability insurance coverage could end up saving them thousands of dollars per year.