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Small businesses not living up to their reputation as the nation’s top job creators

Small businesses are often pegged as the nation’s most reliable job creators. That hasn’t been the case lately. (Joshua Lott/Getty Images)

Hiring by small businesses wasn’t quite as sluggish as it initially appeared the last few months. Nevertheless, the sector so often lauded as the nation’s most reliable economic engine still isn’t exactly living up to its reputation.

Small businesses hiring remained flat in April, with small employers across the country adding 82,000 jobs, according to the latest report published by payroll company ADP on Wednesday. That’s up from 81,000 in March and 80,000 in February, both of which were revised considerably higher, as researchers initially reported job gains of 72,000 last month and 59,000 in February.

However, as it pertains to small businesses, the revisions are hardly cause for celebration.

Monthly additions in the 80,000 range put small business employment growth slightly behind last year’s pace, when small businesses (those with fewer than 50 employees) added an average of about 88,000 jobs each month. And 2013 was considered a soft year on the hiring front, given severe disruptions like the government shutdown in the fall.

Meanwhile, after dipping below 40 percent for only the second time in the past year in March, small businesses’ share of the total new jobs added by the economy dropped even lower in April, down from 39 percent to 37 percent.

Since the start of 2013, the only other time small businesses have accounted for that small of a share of the nation’s job growth was October, when the government shutdown brought hiring to halt. After bouncing back to around 50 percent in November, small firms’ share of total job gains has now declined every month since December.

Many had hoped that with a little more certainty heading into this year around the federal budget and the health care law, and with consumer spending on the mend, this would be a better year for job growth on Main Street.

One third of the way in, it’s not looking that way.

Follow J.D. Harrison and On Small Business on Twitter.

J.D. Harrison covers startups, small business and entrepreneurship, with a focus on public policy, and he runs the On Small Business blog.



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