ADP data shows year-over-year payroll growth is negative 88,000 for small corporations sized 20-49. Trends are negative in all but very large corporations.
I created some new charts today from a download of the ADP National Employment Report for July.
Year-Over-Year Payroll Growth Key Points
- Trends are very negative for small businesses.
- Year-over-year payrolls are -88,000 for businesses with 20-49 employees.
- For mid-sized corporations with 250-499 employees, the trend is slightly positive.
- Large-corporation are the only group with strongly positive growth.
ADP Employment by Employer Size
The above charts explain many things.
BLS Sampling Weights
- Corporations with 1-19 employees provide the second largest number of jobs.
- Corporations with 20-49 employees provide nearly as many jobs as the largest corporations but that trend has now gone negative.
- If the BLS is oversampling large corporations, and/or undersampling small corporations, then its monthly nonfarm payrolls will be hugely overstated.
- This is a likely explanation for the large ongoing discrepancy between employment and jobs and the QCEW reports vs nonfarm payrolls.
Jobs Much Weaker than Expected, the Unemployment Rate Ticks Up
Counting negative revisions, there was unexpected weakness across the board in June, especially private and manufacturing payrolls.
On July 5, I commented Jobs Much Weaker than Expected, the Unemployment Rate Ticks Up
In addition to birth-death errors discussed below, undersampling of small businesses or oversampling large businesses can explain the above chart.
Expect the BLS to Revise Job Growth Down by 730,000 in 2023
On July 26, I commented Expect the BLS to Revise Job Growth Down by 730,000 in 2023, More This Year
At the heart of these revisions is a horribly flawed birth-death model used by the BLS. My calculation closely matches an estimate by Bloomberg’s chief Economist.
In addition to the birth-death model, or perhaps explaining the birth-death model errors, small business employment is declining fast.
“All Hell Breaks Loose” In the Next Few Months as Recession Bites
On July 25, I commented “All Hell Breaks Loose” In the Next Few Months as Recession Bites
Two of us are still adamant that a recession has started. The other is Danielle DiMartino Booth, in her best video yet. Please take a look.
The ADP report today provides further solid evidence of what’s happening.
Mish, I am listening to you on George Noory’s radio show now.
I appreciate you reporting about actual job growth, and not the economic statistics the federal government bureaucrats are spoon feeding the public before the upcoming November election.
We’re not worrying about recession or jobs in Oregon, Mish…we get to vote (Nov) on a ballot measure to increase the Corporate Activity tax in order to write hot $750 checks to Oregonians each year. It’ll surely drive even more corporation payrolls to our amazing state. /sarc
Well for starters, it means more people unemployed, some by choice however, I am guessing.
The large number of Baby Boomers has left a lot of Family Businesses behind I would also guess.
Technology, (and cost of) has come a long way for small businesses to be able to compete and therefore survive.
I would also suggest that an awful lot of money that was sloshing around, has or is drying up. Less taxpayer stimulus/giveaway money, so therefore less Government money as a result.
This is all just adding to the downward spiral of America. What’s that saying? “Slowly at first, and then All At Once! Are we nearing the “All At Once” stage of events yet?
That is because small businesses generally don’t work for government, and that is where all the money is now.
“Jobs Much Weaker than Expected” By Whom? Nobody looking for work, who.should know and do.
Oh wait, I know, I know… The MSM!!!
At least whoever they are, they are definitely getting their moneys worth in attempts anyway…
I’m always surprized by how many and how much the media is surprized so often.. its truly surprizing when you think about it…
Yup. The inflationary depression is rolling right along crushing dreams.
And has been since 2007-8. Maybe since 2000.
Alternatively, with tinfoil hat firmly in place, the die was cast the day they sunk the Titanic.
many don’t know the relationship of the founding of the Federal Reserve and the sinking of the Titanic.
Many still think the Federal Reserve is a government entity…
The problem is big companies have become even more powerful after covid. Big companies thrived while most small companies still haven’t recovered. What you actually need is to enforce regulations that exist but aren’t enforced to breakup giant companies like Amazon and Wal-Mart who are double dealing. Oddly I am surprised no one here is supporting that. I predict this will be one of Harris’s main themes and Elizabeth Warren will be given more power to breakup large corporations should Harris get elected.
Biden and Harris are the ones that supported the mandates and tyrannical covid measures that did this to small businesses. Only big companies that could afford to pay the Biden cartel’s bribery fee (donations) were allowed to remain open. Harris would not breakup the big bribery scheme. If she tried the corporations would send their bribery fees elsewhere.
Who would they send them to ? A trump controlled autocracy that picks only Trump companies as winners and everyone else as losers ? There is no real alternative now that Biden was forced out b/c he was so ineffective. Harris will take the donations but unlike Biden she isn’t beholden to anyone.
Which big companies are you thinking will be targeted for breaking up? If you are old enough you’ll remember the AT&T breakup in the early 80s into a handful of baby Bells. Problem is that within a decade or so, most of them just merged back together again.
What you are missing is that online has devastated smaller companies. There is no longer any need to go to a small mom and pop store when you can just order online. Not just from Amazon (which itself is really a huge conglomerate of tons of small companies) or Walmart but increasingly directly from China or from the manufacturer itself if it’s a US company. This is the future and there is no way to stop it and resisting it is a massive waste of time and effort.
Maybe they should not approve mergers in the first place. I’m only speaking of large mainly tech companies that started out as tech companies but now do everything under the sun. We have regulations against double dealing the way Amazon and others do. It just isn’t enforced. All of this comes back to greed on the part of politicians and investors who drive the narrative. The small business owner and employees are last in the pecking order. But change is coming I think if Harris wins. Buttigieg and Warren are the tip of the spear in a Harris administration. Manufacturing in America is actually returning b/c it is no longer cheap to operate in Asia. In general globalization is receding and will continue to do so. Some in DoD finally figured out that offshoring everything is not a competitive advantage when what you need gets manufactured overseas.
Still not quite sure what you mean when you talk about double dealing and that there are regulations against it.
Warren is totally clueless about business. She has zero idea how anything actually works.
Virtually the only things consumers care about are price and consumer protection from fraud. Unless these changes make things cheaper or provide greater protection from fraud, no one is going to be interested it or want it.
Are you crazy – the statists hate small business since they have a more difficult time controlling entrepreneurs.
Yes the antitrust law that worked for 80 years was eviscerated in the 1990s by a Bork ruling, which has led to consolidation in far too many industries. Supermarket shelves appear to contain many brands but most are owned by a few large companies. Ditto autos, internet, mobile, software, airline routes, most consumer products, major services (Vanguard/BlackRock etc)… even restaurant chains are being conglomerated. It takes far more than 2 or 3 suppliers to create a genuinely competitive market.
However, you will not find either the RINOs nor the DINOs fighting for a return to proper anti-trust enforcement. They’re all corporate-fascists at heart. The only real difference is in the smell of the BS they all emit when they’re trying to get re-elected to the corporate gravy train that runs around the Swamp.
P.S. This has in fact been discussed on sites like these (I bring it up when it’s topical, and I’ve seen others do it.). But it should be discussed a lot more! Only with competition between suppliers can labor get paid a proper share of the pie, workers be most productive and the populace as a whole be most prosperous. Competition drives innovation. It does reduce profit margins, but that isn’t bad since it increases workers’ share of the economic pie and that enlarges the pie for everyone.
How exactly does competition between suppliers guarantee labor gets a fair share of the pie?
For instance we can get very cheap Chinese EV’s. That increases the number of suppliers and thus increases competition. Except those workers in China are paid less than ones here so workers (and companies) here will be out of business unless they earn less.
All these things require a closed economy (ie no imports). That’s not going to happen. The unique prosperity from the end of WWII to 1970/1980 when the US and Canada were the only game in town will never ever be repeated.
The illegals, in the black market, replaced part timers workers in small businesses
Most small businesses are professional firms, not restaurants. Real estate, law, accounting, other specialized services. Realtors and real-estate related fields are definitely getting squeezed right now, both residential and corporate.
Mag7. Everyone else universal basic income. White Christians get less because racism. Viva la revolucion! Why work?
Small business services local communities.
Local communities have had their earning power sucked out by Trade deficits with foreign Nations.
I am not a trained economist but it appears to me a high correlation between low domestic money velocity and the ongoing international trade deficits generated by United States.
That low money turnover is hurting Jobs growth at the Local level. Every employee is not an Einstein level thinker. Some people just need jobs so as to live their lives with some peace and quiet and a Holiday feast or two thrown in to make them Happy.
Small employers are hemorrhaging workers while big corporations are not. This is how the government likes it. THEY can’t control the little guys like they can the big public companies.
Pandemic. Walmart stayed open, main street not so much.
That got inverted in 2022 with record new business formation. But now we have a new phase of weakness setting in.
Big companies are the only businesses that can afford the legal costs (regulations) to continue/grow in business. Attorneys are not inexpensive – yet. This is great news for the grey/black market enterprises. Gives those southern immigrants a leg up.
Thanks for these timely articles, Mish! I read EVERY one of them daily.