I am always a little bit skeptical of employment data being provided by the U.S. Department of Labor and the executive branch of government. Setting aside the political reasons for some of my skepticism, much of the government data lags by several months and some of it is derived from broad estimates. When it comes to looking at trends I prefer to look at surveys and indexes with data as close to the original source as I can find.
We all know the three words for our economy this year are jobs, jobs, jobs. So how is the job situation? Is our economy still seeing negative losses or positive gains in jobs?
Intuit, through its small business bookkeeping program QuickBooks and online payroll offerings, handles approximately 1,000,000 small business payrolls. Since those payrolls are transmitted to Intuit close to real time, Intuit’s ability to see trends is better than many other sources.
Recently Intuit released its new Small Business Employment Index, which is based on the online payroll data obtained from nearly 50,000 small businesses.
The Intuit index shows some positive trends for businesses employing fewer than 20 employees, which comprise 87 percent of the U.S. private employer base. Intuit’s recent survey also measured compensation for average employees.
According to Susan Woodward, a nationally recognized economist who worked with Intuit to create the index, “Employment for these small businesses began trending upward in mid-2009, a good sign for the overall economy.”
Intuit’s survey highlights include:
- Nearly 150,000 new jobs have been created since June 2009.
- Nearly 40,000 new jobs were created in February 2010.
- Average employee payroll per month was $2,559, with an average of 101.4 hours of labor worked per employee.
Compared to the U.S Bureau of Labor Statistic’s National Employment Index, Intuit’s small business employment index shows that small business employment remained stronger longer into the recession and did not drop as far as the Bureau of Labor’s numbers indicate. I believe this difference is very nature of the difference in survey samples. The Bureau of Labor’s index includes all employers regardless of size. I believe it tends to be skewed toward big business because of the easier nature of collecting data from big business.
If you believe, like I do, that small business will generate more jobs faster than big business (given credit availability), then the Intuit index is encouraging. More information about the Intuit index is available on their Web site.
Sam Thacker is a partner in Austin Texas based Business Finance Solutions.
You may contact Sam directly at: firstname.lastname@example.org
or follow him on Twitter: SMBfinance
EXTRA: If you have questions for Sam regarding business financing, the credit market, and similar issues, please send an e-mail. Your questions will be recorded and Sam will answer the best ones in his Ask the Expert podcast show.