If you listen to the mainstream media about job creation, the theme goes something like this: Small businesses still are entrenched in the recession and cannot hire new employees, prolonging the recession and adding to the inability of unemployment rolls to decrease.
But that isn't really the case. According to Bloomberg BusinessWeek, small and midsize companies have been producing more jobs than larger companies and creating them faster since the recovery from the recession began. The magazine goes on to say that because small-business employment still lags where it was during pre-recession levels, the perception that small businesses are not hiring continues.
ADP, a nationwide company offering payroll services, sponsors the monthly ADP Employment Report, which is developed and maintained by Macroeconomic Advisers LLC, St. Louis. The report analyzes employment at more than 300,000 private businesses and recently revealed companies with fewer than 50 employees hired 2.6 percent more people in March 2012 than in July 2009 (when the recovery began). And businesses with 50-499 employees hired 3.2 percent more people during the same period. Conversely, companies with more than 500 employees hired 0.2 percent fewer people during that period.
Behavioral economists say the impression that small businesses aren't creating jobs is because people want things to return to pre-recession levels, which clearly is not happening. Small-business job losses were so large during the recession, the jobs simply have not been replaced yet. The same ADP report shows small-business employment is 96.7 percent of what it was before the recession began. At this rate, it will take until the end of 2013 for small-business growth to return to 2007 levels.
So when you hear the media talk about job creation, remember the facts: Small businesses are recoveringand fairly wellbut the levels of pre-recession employment won't be reached for quite some time.
Ambika Puniani Bailey is editor of Professional Roofing and NRCA's senior director of communications.