CHART OF THE WEEK: Small Businesses Lost Fewer Jobs

Data from the ADP Employment Report, a monthly measure of employment at U.S. businesses that use Advanced Data Processing’s payroll services, shows that small companies lost a lesser fraction of their workforce than big businesses during the Great Recession.

While large companies have yet to show much of a trend back to pre-recession employment levels, ADP’s figures show that small companies have begun to add back workers.  The smallest businesses —  those with one to 49 employees — lost the smallest proportion of workers, but medium sized companies — those with 50 to 499 workers — have shown a slightly faster pace of recovery in jobs.

The chart below shows the number of people employed each month in businesses with 1-49 employees, 50-499 employees and more than 499 employees (as a percentage of the number employed in November 2007, the month before the recession started).

Smaller businesses lost fewer jobs in recessionCLICK FOR LARGER CHART

Editor’s note:  added the third paragraph above for clarification’s sake.


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.

6 Reactions
  1. At first glance, this data appeared to show that small business do create a higher per centage of jobs. But isn’t this chart comparing different things — a x/49 is much different than x/499. Does this chart account for that? I’d like to better understand as small business growth trends directly impact my business. Sandra Chesnutt, AdvancedAR

  2. 1-49 employee businesses employ the most and eliminate the least.
    Time for an SBA category, research and support just for them?

  3. Initially I wasn’t very surprised by the results. Big companies have a lot of inertia, so starting to add people would take them longer. However, then I saw that it was the largest firms that started cutting employees the quickest in 2008. So it’s good to see that smaller businesses are making such a positive impact on the economy.

  4. Hi Scott,

    It’s always good to see that companies are getting back on track and hiring work force again. No doubt that small companies let go of fewer staff, the reason was simple, they didn’t have as much human capital as these big companies did. However, such data highlights the importance of these small companies and their contribution to the economy. Thanks for sharing!

    Riya Sam

  5. Is this supposed to be great news for small business owners? Numbers can really lie these days and although it’s great that small businesses help in keeping the unemployment rate at its current pace, still.. they need to get better incentives from the government and their contribution to the economy must be appreciated – for real.

  6. Maine has actually seen an increase in micro business (1 to 5 employees). I think the green and red line people have moved to the blue line in a response to static unemployment.