The Small Business Revenue and Employment Indexes show an ongoing decline in small business employment since May of this year. The October Employment Index indicates that small business employment decreased by 0.05 percent, at an annualized decline of 0.6 percent. This equates to approximately 10,000 fewer jobs than in September. The October decrease in employment continues a mild decline that began in May. From March 2010 to May 2012, small business employment grew by 150,000 jobs, totaling 19.9 million. However, since May, small business employment has fallen by 65,000 jobs bringing the total recovery to 85,000 small business jobs.
“The absence of a strong rise in small business employment during the recovery reflects two forces,” said Susan Woodward, the economist who worked with Intuit to create the indexes. “First, while construction shows some recovery, residential construction activity remains far below where it was in 2006. Second, small business employment has been a declining share of private sector employment for at least 60 years. The decline tends to be abrupt in recessions and slower the rest of the time.”
She further went on to explain that many of the jobs lost are primarily non-manual routine work, such as word processing and checkout services in retail. Also, small businesses start with more of these jobs and thus lose more than larger firms.
Small business hourly employees worked an average of 107.1 hours in October, a decrease of 0.7 percent, or about 42 minutes, making for a 24.7 hour workweek. Average monthly pay for small business employees dropped to $2,791 in October. This equates to a decrease of $3 down from the growth of $17 seen from August to September. This would be equivalent to annual wages of about $33,500 per year, which is part-time work for many small business employees.
October’s employment index is based on data from Intuit’s Online Payroll and QuickBooks’ Online Payroll, and covers the period from Sept. 24 through Oct. 23. The employment index is based on anonymized, aggregated data from 170,000 small business employers that use Intuit’s products. The Revenue Index is based on data from 100,000 small businesses that meet Dunn & Bradstreet’s small business industry classifications.