Small Businesses Once Again Create More Jobs Than Big Businesses

Employment growth in small businesses

Small businesses created almost double the new jobs in January 2014, compared with large businesses. And when you add growth among medium-sized businesses to the employment growth in small businesses, the numbers swamp the job growth of large corporations.

The ADP Employment Report showed that private-sector jobs grew by 175,000 during the month.  That’s a considerable drop compared with November and December.  However, that is “in line with the average monthly growth throughout 2013,” said Carlos Rodriguez, president and chief executive officer of ADP.

ADP defines small businesses as those with under 50 employees.  So it equates to millions of fairly small employers.  Medium sized businesses in ADP’s lexicon are those with 50 to 499 employees.  Some entities, such as the U.S. Small Business Administration, would define those as small businesses, too.  When you consider that, you see that the majority of net new jobs are coming from smaller employers.

And what types of industries are creating these jobs?  Well, it’s not manufacturing. Manufacturing jobs show a loss of 12,000 for the month.

Construction jobs were up.  Don’t get too excited, though. Professor Scott Shane has pointed out that the long term trend in construction startups is actually downward.

By far, most of the new jobs came from the service industries (160,000).  A large chunk of those were professional and business services. Transportation and utilities also grew.

ADP collects statistics based on actual anonymous payroll data from businesses that use its payroll services.  This data covers nearly 24 million U.S. workers. Then estimates are created for national employment numbers in collaboration with Moody’s Analytics.

Anita Campbell Anita Campbell is the Founder, CEO and Publisher of Small Business Trends and has been following trends in small businesses since 2003. She is the owner of BizSugar, a social media site for small businesses.