Ever wonder where all the private sector job and career growth opportunities went? If you haven’t heard, they are in smaller companies. As larger companies continue to shrink, there is no indication that this trend will change any time soon. Let’s look at the facts . . . .
An interesting thing happened at the U.S. Bureau of Labor Statistics (BLS) in the middle of the 1990’s. They woke up one morning and realized that they did not have good long term data regarding the gain and loss of jobs versus employer size. Studies were conducted. New data gathering and analysis projects were initiated for private (non-government) sector job gains and losses.
As
we head into the second decade of the 21st century, we now
have data by company size that has been accumulated for several
years. This data documents job gain and loss prior, during,
and after the 2000/2001 recession. The following graph shows
the dramatic shift many have sensed is occurring in
the U.S. employment market.
Data source for
private sector job gains and losses: U.S. Bureau of Labor
Statistics
If
you examine the graph for each of the following four periods,
you will see that
• Job growth in the years leading up to the 2000/2001 recession was dominated by companies having more than 500 employees.
• As the recession became evident in 2001, larger companies were still hiring while smaller employers reacted more quickly and curtailed hiring.
•
Once all the downward indicators became evident and the 9/11
attack took place, companies across the board experienced
net job losses in both 2002 and 2003.
•
During the job recovery of 2003-2006, job growth was dominated
by companies with less than 500 employees. Those with less
than 100 employees produced the most new jobs.
The
statistics illustrate a job market changeover that is not
typical for past recessions. Job creation
has moved from larger to smaller companies. In 2004-2006,
why didn't large companies re-hire like they did after earlier
recessions? Because the slash and burn executive leadership
style is flourishing in American board rooms. It may
take several years and dozens of Nardeliesque CEO's getting
canned before the handwriting becomes large enough on Fortune500
board room walls.
It is likely that
the data in the graph actually understates the growth
trend of small business employment. Here’s why this could
be true --
Basic data can only tell a certain amount of the story. Beyond that, some intuition is required. We know that every month new small companies are being formed. We also know that every month some of these small companies reach a size such that they become acquired by a larger company. Such activities are being reported regularly.
So,
what we have underlying the numbers in the graph is a constant
churning of small companies growing and getting acquired,
at which point the small company ceases to be shown in the
statistics and the larger company shows some manner of job
gain. Next, in many cases, the larger company “integrates”
the smaller company into their operations and reengineers
the head count to a level below the total that existed pre-acquisition.
Based upone this known flow of jobs due to mergers and acquistions,
it seems reasonable to assume that the statistics overstate
job creation in large companies.
In choosing a potential employer, there are more factors than simply job growth. Here are a few basic questions to consider:
• Is the company focused on organic growth from the inside . . . or growth through external M&A?
• Does the company reward and promote high achievers?
• Do they truly value their employees?
Your answers to these and other important questions need to be evaluated before you decide to sign up with a new employer.
Summary
Job growth has migrated
to companies with 500 or less employees. It is reasonable
to assume this trend will continue into the foreseeable future.
Job changers would be wise to consider these factors when
developing their target list of potential employers.
To be most successful in today's job market, it may be best
to stop thinking Fortune500 and realize that your fortunes
are to be made in companies with less than 500 employees. |
