Historically when employment picks up it has been small businesses that lead the way—before huge multinational corporations start hiring employees in the dozens or hundreds, it’s small businesses with payrolls of 20 people or less that make one or two key hires. The health of small businesses has always been the country’s canary in the economic coal mine, and in the case of the U.S. in 2010 the canary is very sick. The Intuit small business employment index found that in June small businesses had fewer new hires than any time since October. To understand the oversized importance of smaller businesses consider that these companies employee about one-sixth of the nation’s workers, but so far in 2010 have added one-third of all new private-sector jobs. Can small business be counted on to rescue the broader American economy?
Susan Woodward, economist at Sandhill Econometrics & director of the Intuit Small Business Employment Index