July 20, 2010

As the economy shows signs of recovery, small business employment among the smallest businesses—those with fewer than 20 employees—continues to pick up, according to the latest Intuit Small Business Employment Index.  However, it is not growing as fast or as much as we would all like.

According to the June Index, employment for small businesses grew by 0.09 percent, roughly a 1.1 percent annual growth rate. The figures translate to some 18,000 new jobs in small businesses in June, and a total estimate of 330,000 new jobs since October 2009.

The Intuit Small Business Index is one of the few surveys of hiring trends for companies with fewer than 20 employees. These firms account for 87 percent of all employers in the U.S., with nearly 20 million employees altogether.  Intuit believes these small businesses “play a key role in the economy that is different in interesting ways from that of larger businesses.”

“Employment rose, but the rise was at a slower rate for June than for previous months,” said Dr. Susan Woodward, the economist who worked with Intuit to create the index. “At this point in a recovery, the labor market is still sufficiently slack so small businesses should be hiring vigorously. They are hiring, but not as fast as in the first quarter.”

Compensation of small-business employees grew by 0.3 percent in June and is now $2,577 per month, up slightly from $2,570 per month in the May Index. Monthly hours worked increased by 0.05 percent in June to 103.5 hours, compared to a revised estimate of 103.4 hours in May.

“Hours worked per employee continue to rise, but at a slower rate than we would like,” Woodward said.

So, in other words, what I read from the Intuit Index, is:  “tepid growth.”  There’s net new hiring and more hours being given to hourly workers.  But the pace of it isn’t increasing as fast as previously or as we might expect at this stage of the economic recovery.

However, there is one brighter sign, according to Woodward:  “On the bright side, monthly compensation per employee continues to rise at about the same rate as for the last five months. We do not see the same slowing in compensation as in employment or hours worked.”

The monthly Index measures small-business employment, hours worked and compensation; data are pulled from approximately 50,000 employers nationwide that use Intuit Online Payroll.  It measures actual data.

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Anita Campbell, Article, hiring, Small Business Trends

Join the conversation ( 3 )

• Martin Lindeskog 1 year 9 months and 20 days ago

  

  Have you compared the Intuit Index with the Purchasing Managers' Index?

• Yonsal Ltd 1 year 9 months and 28 days ago

  

  Small businesses are growing but at slow speed because of recovering economy. If we look at the overall performance of Small businesses we can conclude overall enhancement in almost every sector. I hope speed will also be fast with time passed. Online Small Businesswww.yonsal.com

• SHAW HERGENRATHER 1 year 10 months and 4 days ago

  

  We are currently very busy in our segment (specialty contractor of fire protection systems), and need to hire additional skilled labor and engineering resources. Unfortunately, we are unable to do that because most of our clients have significantly slowed their payments, which is creating a cash squeeze.