October 22, 2014

Employment Situation Best at Smallest Businesses

Employment is higher than before the Great Recession at only the smallest businesses, data from the most recent ADP Employment Report shows.

In conjunction with Moody’s Analytics, payroll firm ADP produces a monthly report on employment at private companies of different sizes, using data on 416,000 businesses that use its services. While less accurate than the information provided by the Bureau of Labor Statistics, the ADP report is one of the best sources of timely data on employment at small businesses.

As the figure below shows, the number of people working at businesses with 20 or more employees remains below December 2007 levels. However, 193,000 more people worked at companies with one to 19 employees in February 2013 than did so in the final month of 2007.

Private Sector Employment as a Percentage of December 2007 Levels.

Source: Created from data from the ADP Employment Report

Source: Created from data from the ADP Employment Report

The better employment situation at the smallest businesses isn’t the result of more robust hiring at tiny firms during the current economic recovery. Since the end of the Great Recession, employment has climbed the most at businesses with more than 500 employees—up 6 percent since June 2009 according to ADP estimates. At companies with between 50 and 499 employees, employment has climbed 5.3 percent. At businesses with 20 to 49 workers, it has risen 4.7 percent, while at companies with fewer than 20 workers, employment has increased only 3.3 percent.

The better employment situation at tiny firms comes from milder layoffs during the recession. As the figure clearly shows, employment at companies of all sizes shrank during the worst economic downturn since the Great Depression. However, declines were far shallower at companies with fewer than 20 employees than at ones with more workers.

5 Comments ▼

Scott Shane


Scott Shane Scott Shane is A. Malachi Mixon III, Professor of Entrepreneurial Studies at Case Western Reserve University. He is the author of nine books, including Fool's Gold: The Truth Behind Angel Investing in America ; Illusions of Entrepreneurship: and The Costly Myths that Entrepreneurs, Investors, and Policy Makers Live By.

5 Reactions

  1. Just another reason to be a fan of small business!

  2. So many reasons to support a small business! in 2012 small businesses accounted for 47% of private sector employment!

  3. A single small business might not seem to be doing much in terms of employing a large number of persons; but by the time you pull together the vast number of small businesses, you discover they are really contributing much.
    Goverment should do more in encouraging the small businesses to grow instead of depending only on large firms.

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