Solid Net Job Growth Seen Among Very Small Firms and Large Firms

Advocacy has just published its Small Business Quarterly Bulletin with data through first quarter 2012. 

chart 4, employment change by firm size

While small firms with 20-499 employees provided three-quarters of the net employment growth since the end of the downturn, more recently, even the very small firms (fewer than 20 employees) and large firms (500 or more employees) showed solid net increases (Chart 4, above). Increases were driven by existing firms, as birth and death employment essentially netted each other out leaving little to no impact on the overall employment level. The decline in employment from births over the last decade has been accompanied by a corresponding decline in employment from deaths.

The number of births has risen since the end of the downturn and deaths have declined; when combined they are referred to as business churn. Business churn is needed to keep the economy from stagnating, and churn has been declining. However, the lower churn rate seems to follow the overall decline in the economy by about 18 months.

Overall, the small business trends are positive with the employment increases mentioned above, proprietors’ income up, and business bankruptcies trending down over the last few years.

—by Brian Headd, Economist

Leave A Reply