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In March, Small Business Bears Brunt of Job Loss
By Marc Tracy
Well if small businesses' larger macroeconomic role is, as President Obama has said, as job-creators, then things are looking bad indeed. Yesterday the payroll firm ADP released its celebrated monthly jobs report for March, and the outlook isn't brilliant. In that one month alone, small businesses--those with one to 49 employees--shed approximately 284,000 jobs out of a total of 614,000 net total lost positions.
Other rundowns of the report--see Fortune's and Independent Street's, for example--focus on the overwhelming dynamic at play here, which is that the small businesses, which previously had shown the most immunity to the recession, particularly in the realm of jobs, are now being hit as hard if not harder. The phenomenon is best summed up in the report by the head of Macroeconomic Advisers, which conducts the research for ADP: "The resiliency displayed by these businesses earlier in the recession, as compared to medium- and large-size ones, is no longer apparent."
A very quick look at the March numbers bears this out:
Total net positions lost: 614,000
Total at large businesses (500 or more workers): 128,000
Total at medium-sized businesses (50 to 499 workers): 330,000
Total at small businesses (under 50 workers): 284,000
It's the depth of the current mess as well as the credit crunch that has led small businesses to get hit so hard, if belatedly. What many of them did was to avoid cuts longer than the big businesses in the hopes of a relatively quick recession. This is a smart strategy--small businesses' balance sheets tend to be such that they can get away with this for longer than large corporations can, particularly if a little bit of tide-you-over credit is available. However, this strategy became untenable as credit became increasingly scarce and as it became increasingly apparent that we are not going to be out of the woods any time soon.
The report, for its part, predicts continuing declines throughout 2009, with a recovery expected in 2010. Gulp.
Comments (0)April 2, 2009 10:35 AM
