Family businesses continue to be the anchor of America’s economy. Accounting for nearly 60% of private employment in the country, family businesses grow, prosper and add jobs even in the face of inflation, burdensome tax policies and pandemics.

This all comes to light in just released research from Family Enterprise USA’s Annual Family Business Survey 2023.

The Family Business Survey, conducted in the first two months of this year, received responses from 571 family businesses and family business centers across the country.

Multigenerational family businesses collectively are the “quiet giant” of the U.S. economy, yet few really understand this, especially those who represent us on Capitol Hill. 

Growth and Jobs

Despite the whipsaw economic environments of high inflation and hard-to-find labor, 74% of the multigenerational family businesses surveyed have succeeded for 30 years or more, 65% expect to grow in 2023 and 71% saw their business increase in 2022.

The survey assessed a cross-section of America’s multigenerational, family-owned businesses, which in total contribute $7.7 trillion annually to the U.S. gross domestic product. Family businesses account for 83.3 million jobs, or 59% of the country’s private workforce, research tells us.

Family businesses cover a broad range of industries. More than a quarter of the survey participants (26% ) operate in manufacturing, 14% in construction/facilities, 7% in real estate and 5% in agriculture.

Friendly Places to Work

The vast majority (91%) of the family businesses that participated in the survey said they kept jobs and 61% added jobs during our recent high-inflationary period. Only 9% of the family business respondents cut jobs.

Nearly half (46%) said they pay “above average” wages and benefits, and 72% said they have “generational employees.” The term refers to multiple generations of the same family (not related to the business owners) who work or have worked for the family-owned company. In addition, 82% of survey respondents donated funds to local charities or local chapters of national charities.

Simply put, family businesses have deep, deep roots in America’s communities. They are more likely to keep jobs, add jobs, pay better than average wages and give back to their communities.

Top Family Business Worries

Income taxes and labor worries are the top economic hurdles America’s family businesses foresee in the year ahead.

The annual survey showed the biggest worry was the country’s tax policies, with 50% of respondents saying high personal income taxes were the number one concern, up from 45% a year ago.

Finding, training and keeping employees was cited by 31% of family businesses and family offices as a critical concern. Shifting market conditions were also a key worry, identified by 30% of respondents as a main hurdle to navigate in the coming year.

Economic and Tax Issues

Increased inflation, recession fears and supply chain bottlenecks also were cited as worries by our survey respondents.

Nearly three-quarters of family business (74%) said inflation “hurt profitability,” and 86% said supply chain disruptions were still top of mind as a critical issue, the survey found.

As mentioned, taxes were respondents’ top economic priority. Some 19% said the “most important” tax issue was to reduce personal income taxes, while 18% said reducing the estate tax was a priority. Regarding changing the estate tax provision, 33% thought it important to keep it “as is,” while only 24% said this a year ago.

Transition to Next Generation

When it comes to passing down the family business to the next generation of family operators, 86% of survey participants said  it is important to keep the business in the family to “create and sustain jobs.” Most (79%) believed their family business is important because it’s part of the “family legacy.”

The study also revealed that 66% have passed on ownership to the next generation, compared with 51% who reported this in last year’s study.

Pat Soldano is the president of Family Enterprise USA and the Policy Taxation Group. Both are non-partisan organizations advocating for family enterprises of all sizes, and are the organizers of the Family Enterprise USA Annual Family Business Survey 2023.