Small business employment dropped since May

Since May there's been a continual decline in small-business employment, according to Intuit Inc.’s Small Business Revenue and Employment Indexes.

In fact, the October Employment Index shows that small business employment dropped by 0.05 percent for an annualized decrease of 0.6 percent. This totals to roughly 10,000 fewer jobs than in September. After considering October’s numbers and the most recent national employment data from the Bureau of Labor Statistics, Intuit revised downward the previously reported September employment rate to 0.06 percent.

Between March 2010 and May 2012, small-business employment added 150,000 jobs for a total of 19.9 million; however, 65,000 jobs from small businesses have been cut since May for a total recovery of 85,000 small-business jobs, the study finds.

“The absence of a strong rise in small-business employment during the recovery reflects two forces,” says 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. The jobs lost are primarily non-manual routine work, such as word processing and checkout services in retail. These jobs are also lost in larger firms, but small businesses start with more of these jobs and thus lose more.”

On average, small-business hourly employees worked 107.1 hours in October, a 0.7 percent decline for approximately 42 minutes, from the updated number of 107.8 hours in September, the study shows. This totals to a 24.7-hour workweek.

Small-business employees also saw their average monthly pay fall to $2,791 in October at 0.1 percent from the September revised figure of $2,794 per month, totaling to a decrease of $3, a drop from the growth of $17 between August and September, according to the study. Based on these figures, annual wages equals approximately $33,500 per year for part-time work among many small-business employees.

The study also reveals varying growth among U.S. census divisions. Declines were found in all regions except the Pacific, Mountain and West South Central, all of which experienced growth, while the West North Central region held unchanged.


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