First spark of a jobs recovery
By Catherine Clifford, staff reporterMarch 3, 2010: 4:11 PM ET
NEW YORK (CNNMoney.com) — Main Street businesses shed another 18,000 jobs in February, bring the tally of jobs lost from America’s small businesses to nearly 3 million since February 2008, according to a report released Wednesday by payroll processor ADP.
But there are also signs that the worst of the job hemorrhaging is over.
According to ADP (ADP, Fortune 500), small businesses — those with less than 50 workers — were hit hardest last month. Medium-sized businesses, with 50 to 500 employees, added 8,000 net new positions to their ranks.
Joel Prakken, chairman of ADP researcher Macroeconomic Advisers, sees a turnaround on the horizon.
“If the recent trend continues, and given first-quarter GDP growth of 5.9%, private employment could rise next month for the first time in two years,” he said.
Itty-bitty businesses rebound: A separate employment survey released earlier in the week concluded that the nation’s tiniest businesses are already adding workers.
Intuit’s first installment of its new, monthly Small Business Employment Index reported that firms with less than 20 employees added nearly 40,000 net new jobs in February — a sharp contrast to the continued job losses ADP reported. Intuit provides payroll services to small businesses, and based its estimate on online data from 50,000 small business employers.
Tiny companies tend to be the first to cut staff when the economy weakens — and the first to hire again when it improves. The Small Business Administration’s Office of Advocacy released a study Wednesday reporting that companies with less than 20 employees began shedding staff back in late 2007.
“Firms with 20 to 499 employees have taken their beating more recently,” the SBA’s report said.
By Intuit’s count, a recovery in Main Street’s job market has been under way for a few months already. Small business employment grew 0.8% in the past eight months, translating into a net 150,000 new jobs since June 2009, when the market hit its nadir, according to Intuit.
“Small businesses generally recover faster than larger businesses,” said Susan Woodward, the economist who worked with Intuit (INTU) to create the index “To see these figures showing a rise in employment at small businesses is very heartening at a time when good news is scarce.”
President Obama and some in Congress would like to add more fuel to the labor market’s recovery spark. Last week, the Senate passed a $15 billion jobs bill that includes several hiring incentives, including a Social Security tax break for companies that hire the unemployed. The measure is now being considered by the House of Representatives.To write a note to the editor about this article, click here.