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Jan 22 -- The Census Bureau invites public comment to OMB by February 22, 2024 regarding the proposed revision of the Annual Business Survey for 2024. [Comments due 30 days after submission to OMB on January 23.]

In an effort to improve the measurement of business dynamics in the United States, the Census Bureau is conducting the 2024 Annual Business Survey (ABS), covering reference year 2023. The ABS combines Census Bureau firm-level collections to reduce respondent burden, increase data quality, reduce operational costs, and operate more efficiently. The ABS provides information on selected economic and demographic characteristics for businesses and business owners by sex, ethnicity, race, and veteran status. Further, the survey measures research and development for microbusinesses, new business topics such as innovation and technology, as well as other business characteristics. The 2024 ABS is co-sponsored by the National Center for Science and Engineering Statistics (NCSES) within the National Science Foundation (NSF) and conducted by the Census Bureau.

The ABS includes all nonfarm employer businesses filing Internal Revenue Service (IRS) tax forms as individual proprietorships, partnerships, or any other type of corporation, with receipts of $1,000 or more. While the 2023 ABS sampled approximately 850,000 employer businesses to produce detailed statistics by owner demographics, the 2024 ABS sample is reduced to approximately 330,000 employer businesses. Starting with survey year 2024 (reference year 2023), the sample is reduced to approximately 330,000 employer businesses annually (survey years 2024–2027) to reduce the burden on the respondents. The reduced sample size will yield summary-level estimates for women-owned, minority-owned, and veteran-owned businesses at the 4-digit NAICS, U.S., state metropolitan statistical area (MSA), and county levels. The Census Bureau uses administrative data to estimate the probability that a firm is minority- or women-owned. Each firm is then placed in one of eight frames for sampling. The sampling frames are: American Indian or Alaskan Native, Asian, Black or African American, Hispanic, Native Hawaiian and Other Pacific Islander, Non-Hispanic White Men, Publicly Owned, and Women. The sample is stratified by state, industry, and frame. The Census Bureau selects some companies with certainty based on volume of sales, payroll, and number of paid employees or NAICS. All certainty cases are sure to be selected and represent only themselves.

The 2024 ABS (reference year 2023) will also sample 8,000 nonprofit organizations to collect their research activities. Historically, nonprofit organizations were in scope to the ABS, however, they were not surveyed before the 2021 ABS because the survey does not expect nonprofit organizations to be classifiable by sex, ethnicity, race, or veteran status. To include the nonprofit organizations, the total ABS sample size is approximately 338,000 (330,000 employer businesses + 8,000 nonprofit organizations) for the 2024 survey. Of note, nonprofit organizations will only see questions relating to research activities and will not be asked any questions relating to owner demographics.

The ABS is designed to allow for incorporating new content each survey year based on topics of relevance. Each year, new questions will be submitted to the Office of Management and Budget (OMB) for approval.

Employer businesses will be asked questions about the sex, ethnicity, race, and veteran status for up to four persons owning the majority of rights, equity, or interest in the business. Additionally, businesses will be asked a question on gender identify as part of the owner section of the questionnaire. Organizations sampled as nonprofits and respondents with 1–9 employees will be asked about research and development (R&D) activities, R&D costs, and R&D capital expenditures. Further, employer businesses sampled will be asked about the following topics: Goods, Services, and Business Processes; Technology Transfer and Intellectual Property; Domestic and Foreign Transactions; and Management Practices. The 2024 ABS initial mailing is scheduled for July 2024.

Statistics from the ABS will be used by government program officials, industry organization leaders, economic and social analysts, business entrepreneurs, and domestic and foreign researchers in academia, business, and government. Estimates produced on owner demographic data may be used to assess business assistance needs, allocate available program resources, and create a framework for planning, directing, and assessing programs that promote the activities of disadvantaged groups; to assess minority-owned businesses by industry and area and to educate industry associations, corporations, and government entities; to analyze business operations in comparison to similar firms, compute market share, and assess business growth and future prospects. Estimates produced on R&D and innovation may be used to compare R&D costs across industries, determine where R&D activity is conducted geographically, and identify the types of businesses with R&D; to contribute to the Bureau of Economic Analysis (BEA) system of national accounts; to increase investments in research and development, strengthen education, and encourage entrepreneurship; and to compare business innovation in the United States to other countries, including those in the European Union. Results of the research activities data collected from nonprofit organizations will be used to report updated, valid, and reliable estimates of U.S. nonprofit R&D in National Patterns of R&D Resources and BEA's system of national accounts.

The data collected by ABS will also be incorporated into the National Science Board's biennial report, Science and Engineering Indicators (SEI). The R&D data from the nonprofit module will be reported in the Organization for Economic Cooperation and Development (OECD) periodic publications and for international comparisons of R&D efforts. NCSES also anticipates professional associations will use data from the nonprofit module. Likely users in this category include, but are not limited to, the Science Philanthropy Alliance, the Association of Independent Research Institutes, and the Health Research Alliance.

Additional examples of data use include:

-- The Small Business Administration (SBA) and the Minority Business Development Agency (MBDA) to assess business assistance needs and allocate available program resources.
-- Local government commissions on small and disadvantaged businesses to establish and evaluate contract procurement practices.
-- Federal, state, and local government agencies as a framework for planning, directing and assessing programs that promote the activities of disadvantaged groups.
-- The National Women's Business Council to assess the state of women's business ownership for policymakers, researchers, and the public at large.
-- Consultants and researchers to analyze long-term economic and demographic shifts, and differences in ownership and performance among geographic areas.
-- Individual business owners to analyze their operations in comparison to similar firms, compute their market share, and assess their growth and future prospects.

The expected response for the ABS is estimated to be 67 percent. The expected response rate is based on results from previous ABS collections. For survey years 2019 - 2022 the average response rate was approximately 67 percent.  For those reporting to the nonprofit R&D module on the 2022 ABS, the average response rate was 81%.  Check-in rates are monitored regularly during collection.  Post collection, unit response rates will be evaluated.  

As a result of the response rate, the Census Bureau is conducting a nonresponse bias analysis on the results of the 2021 ABS.  The nonresponse bias analysis examines unit response rates and total quantity response rates to determine whether there is evidence of nonresponse bias to the key estimates of the survey. The analysis focuses on the differences of response rate by owner characteristics (by sex, ethnicity, race, and veteran status), industry, state-level geography, legal form of organization, and size of firm.  To adjust for nonresponse of demographic characteristics, the sex, ethnicity, race, and veteran status are imputed using donor respondents in the same sampling frame with similar characteristics (industry, legal form of organization, geography). Donor imputations are considered reliable because sampling frame assignments are based on administrative data which have had a high level of agreement with the tabulated race and ethnicity for responding firms historically. Sampling variability estimates are adjusted to account for nonresponse.  Unit nonresponse for non-demographic items is addressed using a weight adjustment where the sampling weights of responding firms are adjusted to account for the nonresponding firms.  Nonresponse weight adjustments are considered reliable when the probability of response is not associated with measured characteristics.

ABS: https://www.census.gov/programs-surveys/abs.html
Census submission to OMB: https://www.reginfo.gov/public/do/PRAViewICR?ref_nbr=202401-0607-002 Click IC List for information collection instrument, View Supporting Statement for technical documentation. Submit comments through this webpage.
FRN: https://www.federalregister.gov/d/2024-01127

For AEA members wishing to submit comments, "A Primer on How to Respond to Calls for Comment on Federal Data Collections" is available at https://www.aeaweb.org/content/file?id=5806

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