U.S. Department of Commerce
U.S. Census Bureau
OMB Information Collection Request
Annual Business Survey
OMB Control Number 0607-1004
Supporting Statement Part A. – Justification
Necessity of Information Collection
In an effort to improve the measurement of business dynamics in the United States, the Census Bureau is conducting the Annual Business Survey (ABS). The ABS combines Census Bureau firm-level collections to reduce respondent burden, increase data quality, reduce operational costs, and operate more efficiently. The ABS replaced the five-year Survey of Business Owners (SBO) for employer businesses, the Annual Survey of Entrepreneurs (ASE), and the Business Research and Development (R&D) and Innovation for Microbusinesses (BRDI-M) surveys. 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 ABS is sponsored by the National Center for Science and Engineering Statistics (NCSES) within the National Science Foundation (NSF) and conducted by the Census Bureau for five years (2018 – 2022). Title 13, United States Code, Sections 8(b), 131, and 182; Title 42, United States Code, Section 1861-76 (National Science Foundation Act of 1950, as amended); and Section 505 within the America COMPETES Reauthorization Act of 2010 authorize this collection. Sections 224 and 225 of Title 13, United States Code, require response from sampled firms.
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. The ABS sampled approximately 850,000 employer businesses for survey year 2018. Starting with survey year 2019, the sample is reduced to approximately 300,000 employer businesses annually (survey years 2019 – 2022) to reduce the burden on the respondents. The sample size should yield summary-level estimates for women-, minority-, and veteran-owned businesses at the 2-digit NAICS, U.S., state and metropolitan statistical area (MSA) 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 nine frames for sampling. The sampling frames are: American Indian or Alaskan Native, Asian, Black or African American, Hispanic, Non-Hispanic White Men, Native Hawaiian and Other Pacific Islander, Other, 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 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. The table below shows the proposed ABS content for each survey year.
Proposed Content for the Annual Business Survey
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|||||
|
Collection Year |
||||
Topic Modules |
2018 |
2019 |
2020 |
2021 |
2022 |
|
Full |
Reduced
|
Reduced |
Full |
Reduced
|
|
Full |
Reduced
|
Full |
|
|
|
Full |
Full |
Full |
Full |
Full |
|
Reduced (digital) |
Full (automation) |
Full (technology TBD) |
Full |
Full (automation) |
|
Full |
|
|
Full |
|
|
|
|
Full |
|
|
|
Full |
Full |
Full |
Full |
Full |
The ABS primary collection method is via an electronic instrument. Those selected for the survey receive an initial letter informing the respondents of their requirement to complete the survey as well as instructions on accessing the survey (see Attachment A). The 2020 ABS initial mailing is scheduled for July 2020. Responses will be due approximately 30 days from initial mailing. Respondents will also receive a due date reminder approximately one week before responses are due. The Census Bureau plans to conduct two follow-up mailings and an optional third follow-up if deemed necessary based on check-in. Nonrespondents may receive a certified mailing for the second and third follow-up mailings. The Census Bureau may also plan to conduct an email follow-up to select nonrespondents reminding them to submit their report in the electronic instrument (see Attachment B). The optional third follow-up may include a paper questionnaire to assist with collecting data from select nonrespondents. Closeout of mail operations is scheduled for December 2020 but may be extended to allow ample time to receive returned forms if necessary. Response data will be processed as they are received. Upon the close of the collection period, data processing will continue and records will be edited, reviewed, tabulated, and released publicly.
The ABS uses the collection year in the survey name rather than a single reference year. The ABS includes questions from multiple reference periods; therefore, the 2019 survey data is referred to as the 2020 ABS (rather than the 2019 ABS).
Needs and Uses
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 research and development 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.
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.
New questions on the 2020 ABS collect data on globalization and the relationship between domestic and foreign activities. These questions are found in Attachment C – 2020 ABS – Section E – Domestic and Foreign Transactions.
Information quality is an integral part of the predissemination review of information disseminated by the Census Bureau (fully described in the Census Bureau’s Information Quality Guidelines) at http://www.census.gov/quality/guidelines/index.html. Data quality is also integral to information collections conducted by the Census Bureau and is incorporated into the clearance process required by the Paperwork Reduction Act.
Use of Information Technology
The ABS is primarily collected via an electronic reporting instrument. Businesses are provided an initial letter with log-in instructions to access the secure electronic reporting system known as the Centurion – Internet Data Collection System. The respondent navigates through the electronic reporting instrument by responding to each screen presented and selecting ‘save and continue.’ Skip patterns are coded throughout the system to ensure respondents only read and respond to questions pertaining to their specific owner and business characteristics. In addition, certain businesses will be pre-identified to skip portions of the survey to decrease respondent burden. Respondents will have access to the questionnaire prior to logging in (see Attachment C). Once a respondent has completed the online survey, a PDF copy of the responses may be printed or saved for business records. The electronic reporting instrument has built-in edits that give respondents the opportunity to verify their responses. The use of built-in edits ensures consistency among data received from respondents. The electronic reporting instrument saves respondents’ progress and allows them to return later to complete the survey. The instrument also generates an error page prior to submission that indicates if a respondent should revisit a page to make a correction.
Implementing an electronic collection instrument reduces the cost of mailing this annual survey. Additionally, electronic responses yield higher quality response data by utilizing edits built into the electronic reporting system to decrease manual edits when the data are received and processed, ultimately leading to cost savings and increased data quality.
Efforts to Identify Duplication
The ABS will exclude certain businesses from receiving a portion of the survey that they will receive on another survey conducted jointly by the Census Bureau and NCSES (Business R&D Survey – BRDS). R&D data are collected on both the ABS and the BRDS surveys. Although some businesses may be selected for both the ABS and the BRDS, the R&D module asked on the ABS is only asked of businesses with 1-9 employees. The BRDS will continue to collect R&D data from businesses with 10 or more employees.
The Census Bureau consulted with NCSES to remove duplication of innovation questions that existed on the BRDS. As a result, BRDS no longer includes innovation questions. Innovation questions are asked of all ABS respondents, regardless of the number of employees.
Minimizing Burden
The ABS uses the following methods to minimize the burden:
Predetermining the likelihood that a business is minority- or women-owned for sampling: Several sources of information are used to stratify the universe. Administrative data from the Social Security Administration (SSA), American Community Survey, and Decennial Census, as well as lists of minority- and women-owned businesses published in syndicated magazines, located on the Internet, or disseminated by trade or special interest groups are used to identify individual proprietorships that are potentially owned by women or minorities; then this information is used to stratify the universe.
Employment-based form path: Based on the number of employees reported by the respondent in section A of the questionnaire, businesses with 10 or more employees will not be asked questions on R&D because those businesses’ data will continue to be collected from the BRDS.
Predetermining owner characteristics to reduce burden on some respondents: Businesses that were sampled for the 2018 ABS, will not be asked questions in Section B: Owner Characteristics for 2020.
Survey instrument design to improve user experience: New questions have been cognitively tested through personal interviews (see Attachments F & G). The remaining questions have been tested and fielded previously with the same population. In addition, the electronic reporting instrument includes skip patterns throughout so that respondents will only read and answer questions pertaining to their specific owner and business characteristics.
Exclusion of nonprofits from receiving the ABS: The ABS universe is matched to publicly available datasets from the IRS. This universe identifies nonprofit organizations whose ownership by sex, ethnicity, race, and veteran status cannot be determined. Businesses identified as nonprofit organizations do not receive a request to respond to the ABS.
Consequences of Less Frequent Collection
The ABS improves the measurement of business dynamics in the United States and expands the availability of federal economic statistics in the areas of owner demographics, entrepreneurship, innovation, R&D and technology. A less frequent collection would impact government agencies’ access to information used to monitor and maintain assistance programs for women-, minority-, and veteran-owned businesses.
Special Circumstances
There are no special circumstances.
Consultations Outside the Agency
Content for the ABS, including topics for modules, is selected by the NCSES and the ABS Survey Director at the Census Bureau. The Census Bureau and NCSES have also collaborated with the Ewing Marion Kauffman Foundation, the Small Business Administration, the Minority Business Development Agency (MBDA), and other agencies to implement a robust and effective program. Feedback on content is obtained through interactions at professional conferences including the American Economic Association (AEA) meetings, the Conference on Research in Income and Wealth (CRIW), and the National Bureau of Economic Research (NBER) Summer Institute.
The NCSES has had extensive consultation outside of the agency in preparation for the various sections/modules included on the ABS and its predecessor surveys including meetings with researchers, academia, data users, expert panels, cognitive interviews and debriefings.
On behalf of the NCSES, SRI International (SRI) organized an Expert Panel on Business Innovation with stakeholders from academia, government, and industry. The Innovation Expert Panel Workshop was held on October 16, 2018.
The workshop focused on the following objectives:
Prioritize the recommendations of the new Oslo Manual edition regarding revised and/or new metrics and data collections on business innovation.
Discuss how the recommendations from the Oslo Manual would be incorporated into the updated ABS innovation module.
Identify the high-priority areas for future collections considering the needs for business innovation data and the interests of U.S. policy makers and academic researchers.
Details of the Innovation Expert Panel Workshop can be found in Attachment E.
NCSES and the Census Bureau consulted the following officials and agencies regarding content for the ABS:
Jan Youtie, Director,
Policy Research Services
Principal Research Associate
Georgia Tech University
North Ave NW
Atlanta, GA 30332
Wes Cohen, Professor
Duke University, the Fuqua School of Business
100 Fuqua Drive
Durham, NC 27708
Steve Landefeld, Director (retired)
Bureau of Economic Analysis
4600 Silver Hill Rd
Hillcrest Heights, MD 20746
Stephen Ezell, Vice President
Global Innovation Policy
Information Technology and Innovation Foundation
700 K St NW
Washington, DC 20001
E.J. Reedy, Senior Director
Polsky Exchange
University of Chicago
5807 S. Woodlawn Ave., Suite 207
Chicago, IL 60637
Mohan Sawhney, Director
Center for Research in Technology & Innovation
Kellogg School of Management
Northwestern University
2211 Campus Drive
Evanston, IL 60208
Nico Thomas, Performance Analyst
National Institute of Standards and Technology
100 Bureau Drive
Gaithersburg, MD 20899
Steve Campbell, Economist
Manufacturing Research and Program Evaluation
National Institute of Standards and Technology
100 Bureau Drive
Gaithersburg, MD 20899
Adam Jaffe, Professor
Brandeis University
415 South Street
Waltham, MA 02453
Mark Crowell, Executive Entrepreneur in Residence
Eshelman Institute for Innovation
UNC Eshelman School of Pharmacy
Chapel Hill, NC
Stuart Graham, Associate Professor
Scheller College of Business
Georgia Institute of Technology
North Ave NW
Atlanta, GA 30332
Ann Xu, Senior Technical Advisor for Impact and Assessment (former)
Advanced Research Projects Agency- Energy
U.S. Department of Energy
1000 Independence Avenue, S.W.
Washington, D.C. 20585
Kenneth Poole, Executive Director
Council for Community and Economic Research
1700 N. Moore Street
Suite 2225
Arlington, VA 22209Dr. Alicia M. Robb, Senior Research Fellow (former)
Ewing Marion Kauffman Foundation
59 Driftwood Court
San Rafael, CA 94901
Arnobio Morelix, Senior Research Analyst & Program Officer (former)
Ewing Marion Kauffman Foundation
4801 Rockhill Road
Kansas City, MO 64112
Dr. Robert W. Fairlie, Professor
University of California Santa Cruz
Department of Economics, Engineering 2 Building
1156 High Street
Santa Cruz, CA 95064-1077
Miriam Segal, Research Analyst (former)
Small Business Administration
Office of Advocacy
409 3rd St,
SW
Washington, DC 20416
Brian Headd, Economist
Small Business Administration
Office of Advocacy
409 3rd St,
SW
Washington, DC 20416
Patrick Delehanty, Acting Director of Economic Research
Small Business Administration
Office of Advocacy
409 3rd St,
SW
Washington, DC 20416
Joseph Sobota, Assistant Chief Counsel
Small Business Administration
Office of Advocacy
409 3rd St,
SW
Washington, DC 20416
Ester Morales, Executive Director
National Women’s Business Council
409 Third Street, SW, 5th Floor
Washington, DC 20416
Delores Rowen, Research Manager
National Women’s Business Council
409 Third Street, SW, 5th Floor
Washington, DC 20416
Patricia Tomczyszyn, Public Affairs Specialist
Minority Business Development Agency
1401 Constitution Ave N.W.
Washington,
DC 20230
A presubmission notice was published in the Federal Register, Vol. 82, No. 150, August 7, 2017, pages 36728-36730, inviting public comments on our plans to submit this request. The presubmission notice generated three comments, including one request for additional supporting materials. The Census Bureau responded to the request. Additionally, two comments were received regarding the exclusion of nonemployer businesses from the ABS collection instrument. These comments were previously provided to OMB and are part of the public record for this collection. Nonemployer businesses are not in scope for the ABS, however, the Census Bureau is using administrative data to produce similar estimates on the sex, ethnicity, race, and veteran status for nonemployer businesses. Details of the development of nonemployer demographics have been provided to OMB for review (see Attachment H).
Paying Respondents
The Census Bureau will not pay or offer gifts to respondents of the ABS.
Assurance of Confidentiality
The information collected in this survey is confidential under Title 13, United States Code, Section 9. Sections 224 and 225 of Title 13 require businesses to report. Respondents are informed in the initial letter that responses are confidential and their responses are mandatory. This information is also available from the electronic reporting instrument as shown in Attachment D.
Justification for Sensitive Questions
The ABS asks questions on the sex, ethnicity, and race of the owners. The business owner characteristics are important to understanding conditions of business success and failure, showing changes in business performance, and barriers to entrepreneurs. These data also allow for a comparison between minority-/nonminority-owned, women-/men-owned, and veteran-/nonveteran-owned businesses. ABS uses the race and ethnicity categories and definitions mandated by the OMB. These standards were developed by the Executive Branch and Congress.
By law (Title 13 of the United States Code), all responses to the survey, including sensitive questions, are completely confidential and may be seen only by persons sworn to uphold the confidentiality of Census Bureau information. The data are used only for statistical purposes and the responses are summarized so that the confidentiality of individual respondents and their business activities is fully protected.
Estimate of Hour Burden
The 2020 ABS will be mailed in fiscal year 2020 to approximately 300,000 respondents. This sample size is needed to provide summary-level estimates for women-, minority-, and veteran-owned businesses at a summary geography and NAICS level. Survey years 2020-2022 will also have a sample size of approximately 300,000. The sample size was reduced from 850,000 for the 2018 ABS. The 2018 survey year collection (the initial year for this survey) required a larger sample size to provide detailed comprehensive estimates for women-, minority-, and veteran-owned businesses to a detailed geography level (U.S., state, MSA, county, and economic place). The smaller sample size reduces respondent burden and will also provide quality estimates for women-, minority-, and veteran-owned businesses at less detailed geography (US, state, select MSA) and industry levels. Response times will vary for selected respondents. For fiscal years 2020 – 2022, the estimated average time for respondents to complete the survey is 52 minutes and estimated total response burden is 260,000 hours.
The presubmission notice published in the Federal Register, Vol. 82, No. 150, August 7, 2017, pages 36728-36730, estimated the response burden to be 35 minutes. However, the estimate was updated using paradata obtained from the collection instruments for previous SBO, ASE and BRDI-M collections, as well as results of cognitive interviews conducted for new ABS content. Additionally, the notice included a much higher number of respondents and total annual reporting burden for the collection.
According to the May 2018 Occupational Employment Statistics from the Bureau of Labor Statistics (BLS) website, the mean hourly wage for accountants (13-2011 Accountants & Auditors) was $37.89. The total annual cost to respondents for their time to respond for fiscal year 2020 is estimated to be $9,851,400.
Estimate of Cost Burden
We do not expect respondents to incur any costs other than that of their time to respond. The information requested is of the type and scope normally known by respondents or carried in company records and no special hardware or accounting software or system is necessary to provide answers to this information collection. Therefore, respondents are not expected to incur any capital and start-up costs or system maintenance costs in responding. Further, purchasing of outside accounting or information collection services, if performed by the respondent, is part of usual and customary business practices and not specifically required for this information collection.
Cost to Federal Government
The ABS is funded jointly by the Census Bureau and NCSES within the NSF. The estimated cost to the Federal Government to conduct this survey for 5 reference years is $36.5 million. The Census Bureau has planned and allocated resources for the effective and efficient management of this information collection.
Reason for Change in Burden
There is no change in burden from the previously approved collection request.
Project Milestones
Milestone |
2018 ABS Planned Completion Date |
2019 ABS Planned Completion Date |
2020 ABS Planned Completion Date |
2021 ABS Planned Completion Date |
2022 ABS Planned Completion Date |
Content Drafted for Cognitive Testing |
June 2017 |
July 2018 |
June 2019 |
June 2020 |
June 2021 |
Cognitive Testing Complete |
August 2017 |
September 2018 |
August 2019 |
August 2020 |
August 2021 |
Content Final/Centurion Requirements Final |
November 2017 |
November 2018 |
November 2019 |
November 2020 |
November 2021 |
Presubmission Notice Published in Federal Register |
August 2017 |
N/A |
N/A |
August 2020 |
August 2021 |
Approval Request Submitted to OMB |
December 2017 |
March 2019 |
March 2020 |
March 2021 |
March 2022 |
Usability Testing |
May 2018 |
May 2019 |
May 2020 |
May 2021 |
May 2022 |
Initial Mail |
June 2018 |
July 2019 |
July 2020 |
June 2021 |
June 2022 |
1st Follow-up |
September 2018 |
September 2019 |
September 2020 |
September 2021 |
September 2022 |
2nd Follow-up/Email reminder |
October 2018 |
November 2019 |
October 2020 |
October 2021 |
October 2022 |
]Possible] 3rd Follow-Up |
November 2018 |
December 2019 |
November 2020 |
November 2021 |
November 2022 |
Closeout |
December 2018 |
January 2020 |
December 2020 |
December 2021 |
December 2022 |
Micro Data Review Complete |
March 2019 |
March 2020 |
February 2021 |
February 2022 |
February 2023 |
Production Processing |
August 2019 |
July 2020 |
July 2021 |
July 2022 |
July 2023 |
Macro Data Review Complete |
October 2019 |
September 2020 |
September 2021 |
September 2022 |
September 2023 |
Dissemination Processing |
November 2019 |
October 2020 |
October 2021 |
October 2022 |
October 2023 |
Data Tables Published |
March 2020 |
December 2020 |
December 2021 |
November 2022 |
November 2023 |
Request Not to Display Expiration Date
The assigned expiration date will be included on the collection instrument.
Exceptions to the Certification
There are no exceptions to the certification.
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