Small-Business Job Growth Key to Recovery

Bob Johnson: This week's chart shows a number of jobs added both at small business--those with fewer than 50 employees--and relatively the large business--those with 500 or more employees. You can see right now that small business are adding about 100,000 jobs per month on a three-month moving-average basis, while large businesses are only adding about a third of that at 36,000 jobs. So, the small businesses are absolutely critical.

Also, if you take a little longer-term perspective and look at the graph, you can see that small businesses almost always predominate over corporations in terms of hiring. The one exception to that is after a recession in the early stages of a recovery when a small business tends to perform at about the same level as a corporation. But then once the recovery really gets going, as you can see in the early 2000s, small businesses really outperform those corporations.

We kind of started that trend in this recovery, and you can see in 2010-11 where we really started to pick up some steam. But small businesses had, for a while, kind of lost their advantage relative to corporations. We're not sure exactly why. It may have been tax law; it may have been a few other issues--perhaps regulation. But now, we're seeing the small businesses, again, begin to outperform those large corporations.

Going forward, I would expect small businesses to continue to be a very important part of this recovery, and they'll be an important indicator of the overall health of this recovery.