Small business is hiring again in the United States – and that is a positive sign that larger employers will begin picking up the pace of hiring in the months ahead.
The latest indication: Employment at firms with fewer than 50 employees ticked up in April for the second month in a row, according to the ADP National Employment Report released Wednesday.
"It's not unusual for small businesses to recover before the big firms do," says Susan Woodward, former chief economist at the Department of Housing and Urban Development and creator of the Intuit Small Business Employment Index. The recovery "will continue slow, but it's real."
The Intuit index, released last week, showed small-business employment growing last month at a 4 percent annual rate.
The only debates are over when the small-business rebound began and how strong it is.
The upturn began last August and has picked up pace in recent months, according to the new Intuit index. Of the 300,000 jobs small firms have created so far, nearly a quarter of them came last month. Compensation and hours worked were also up after nearly a year of no increase or actual decrease.
The ADP report released Wednesday shows a much more recent and tentative recovery for small businesses: a minuscule rise of 4,000 workers in March and an even tinier increase of 1,000 workers in April. Mid-size and large companies hired 31,000 new workers last month, according to ADP.
Why the difference? The two indexes measure small businesses differently: ADP looks at firms with fewer than 50 workers; Intuit, fewer than 20. More importantly, ADP reports on establishments (which could treat each store of a national retailer as a separate small business) vs. Intuit, which looks at specific firms.
So it's not surprising that the Intuit data would show a longer recovery, since it picks up the hiring moves of a local bookkeeping firm or construction company, which are made much faster than, say, store managers of a national chain, which often need approval from management before they can hire.