Report Shows Small-Business Hiring Down

Ahead of the government's monthly jobs report, an Intuit study shows a dip in May job growth.
Business Writers
May 30, 2012

U.S. small businesses added 40,000 new jobs in May, according to a report by payroll processing firm Intuit.

That number, however, is a third lower than the number of workers hired in April  (60,000), with firms also trimming hours for those on their payrolls. This could be a precursor to less-than-cheery news on Friday, when the government releases its own employment report. (But so far, the government report is expected to show that payrolls rose 150,000 in May, an increase from April’s poor showing of 115,000 jobs, according to Reuters. The unemployment rate remains steady at 8.1 percent.)

According to the Intuit survey—technically the Small Business Revenue Index and the Small Business Employment Index—the average workweek for small-business employees shrank by 42 minutes (0.13 percent) in April. And monthly hours worked declined by 0.6 percent, to 106.4 hours. There was a 0.13 percent or $4 decline in the average monthly pay to $2,692.

But that is equivalent to an annual salary of $32,300, meaning that many of the small-business employees are working part-time.

Details of the Study

Intuit—a Mountain View, Calif.–based financial software and online services company —gathered data anonymously from some 78,000 small businesses nationwide with fewer than 20 employees for its survey, which covered the period from April 23 to May 23. The small businesses use the company’s Intuit Online Payroll product.

The Small Business Revenue Index shows that revenues have been growing slowly, with an upturn in the takings for certain industries, a flat level for others, and no decline for any. Meanwhile, the Small Business Employment Index shows that employment expanded slowly, growing by 0.2 percent in May, for an annualized rate of 2.5 percent. The growth was nationwide, except for Oregon and Pennsylvania. The three top states for growth: Arizona, Colorado and Virginia. (The total figure of jobs added in May—40,000—may yet change: April's initially was listed at 40,000 and then was revised upward to 60,000.)

“The employment and revenue indexes tell a consistent story,” says Susan Woodward, the economist who worked with Intuit to create the indices. “Both indicate there is a recovery underway. We need growth at this level for two more years for small-business employment to return to the level we saw in early 2007.”

Growth by Industry

In April, retail, professional services and other services saw revenue rise, while the construction and real estate industries also saw a bit of improvement. Small businesses in the accommodation and food service industry, along with the health care and social services sector, saw flat revenue levels.

“The industry breakouts of the revenue indexes help us understand why the recovery is slow: Construction is still far below normal,” Woodward says. “We know from other federal data as well that construction is still very depressed. Single-family construction is running about 600,000 units per year, compared to 1.5 million units per year in normal times.”

How does this compare with what happened in your business in May?

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