Small-Business Employment: Not Too Shabby

By: Matthew Bandyk
U.S. News & World Report

June 4, 2008

This Friday, the Labor Department will release the unemployment numbers for May, which may answer some questions about whether the economy is headed for or in a recession. But we can get a preview—especially if we're interested in hiring by small businesses—by looking at the National Employment Report released today by Automatic Data Processing, a business outsourcing firm that has 500,000 clients in the United States. The interesting finding is that small businesses—defined here as those with fewer than 50 workers—are actually adding jobs, while larger firms are shedding them.

Nonfarm Private Employment Highlights—May Report:

Total employment: +40,000
Small businesses*: +61,000
Medium businesses**: -3,000
Large businesses***: -18,000
Goods-producing sector: -37,000
Service-providing sector: +77,000

*Small businesses represent payrolls with 1-49 employees

**Medium businesses represent payrolls with 50-499 employees

***Large businesses represent payrolls with more than 499 employees

Among small businesses, there was as much of a discrepancy between the goods and service sectors as there was overall—the small business service sector grew by 62,000, while the goods sector shrank by 1,000.

ADP's monthly National Employment Report and Small Business Report are based on payroll data collected from 1 in 6 private-sector employers in this country. Because the survey is neither totally comprehensive nor randomly selected, you should take the results with a slight grain of salt.