Small business 'surge' in hiring - ADP

By Catherine Clifford, staff reporter


NEW YORK (CNNMoney.com) -- The nation's engine of job growth is revving up: small businesses were responsible for 58% of the private sector hiring in November, according to a report released Wednesday.

Private sector employers added 93,000 jobs overall last month, and businesses with fewer than 50 employees added 54,000 of those jobs, far outdoing their larger counterparts, according to payroll processor Automatic Data Processing.

Employment from large businesses, defined as those with 500 or more workers, increased by 2,000. Medium-size businesses, defined as those with between 50 and 499 workers, increased by 37,000.

Joel Prakken, Chairman of Macroeconomic Advisers, called the 54,000 jobs a "surge" for small business hiring, on a conference call with reporters.

And that is good news for the broader economy. Small business hiring is "something of a precondition to get the unemployment rate moving in the right direction."

As with the broader employment situation, it's service sector businesses on Main Street that are creating those jobs, not goods producers: 49,000 of the 54,000 hires, or 91%, of the job growth in small businesses was in the service providing sector, according to the report from ADP.

Main Street still needs support

The recession cut deep into Main Street payrolls: In the two years from Feb. 2008 to Feb. 2010, businesses with fewer than 50 employees shed almost 3 million jobs, according to ADP's historical data.

In the last 9 months, small businesses have hired back 200,000 workers. It's a start, but there is still a long way to go -- and the President knows that small business hiring is key to the recovery of the broader economy.

"When our small businesses don't do well, America doesn't do well. So we all have a stake in helping our small businesses grow and succeed," said President Obama in Woonsocket, R.I., in October. "And because small businesses create two out of every three new jobs in America, our economy depends on it."

At the end of September, a $42 billion bill aimed at helping the nation's small businesses passed after months of Congressional politicking. Small business advocates are pushing for more help.

"The marked increase in employment by the smallest firms is a very positive indicator for economic growth," said Todd McCracken, president of the National Small Business Association in an emailed statement. "This makes it even more critical than ever that policymakers do everything in their power to ensure this growth can continue."

A few hot-button issues top the NSBA's wish list: Extend, at least for a minimum of two years, the current Bush-era income tax rates, repeal the expanded 1099 reporting provisions contained in the new health care law, extend important tax credits and reform the estate tax which is set to return to 2001 levels as of Jan. 1. To top of page

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