Small Businesses Are Hiring Again, But…

We are on our way back to pre-recession levels of small business employment, the most recent Intuit Small Business Employment Index indicates. Intuit’s measure, which tracks employment at companies with 19 or fewer employees that use Intuit’s Online Payroll product, shows that small business employment has been growing since autumn of 2009.

However, the index indicates that small business employment still has not returned to pre-recession levels. Intuit’s estimates are that 700,000 fewer people worked at small businesses in December 2011 than did so in December 2007. Assuming we add the same number of small business jobs in 2012 as were added in 2011, we will first return to pre-recession levels of small business employment five years after the economic downturn began.

Moreover, employee compensation at small businesses remains below where it was in December 2007 when measured in inflation-adjusted terms. In the last month before the recession hit, the average employee earned $25.90 per hour in 2011 dollars. In December 2011, average employee hourly compensation was only $24.53.

While the trend in the small business employment market is positive, neither hiring nor compensation have returned to pre-recession levels four years after the Great Recession began.

Source: Intuit Small Business Employment Index

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.