While small firms’ average pay tends to be lower than that of larger firms, the demographic profile of the small firm work force needs to be taken into account when comparing wages. For example, about one-third of the difference between small- and large-firm earnings per employee disappears when the comparison is limited to workers who are full-time and have at least a college degree. 11 Small firms’ share of workers, or workers by race or age, does not change much over time or changes slowly, but this relative calm tends to conceal some interesting job flows. The.
