Tuesday, August 09, 2005

More AICPA Survey: Employment Data

As mentioned yesterday, the AICPA survey also covered the issue of employment outlooks. Here in Nebraska, the announcement by Pfizer to eliminate 300 jobs at its plant in Lincoln provides a recent example of a large corporate enterprise downsizing its operations, causing a decline in local employment. Lost employment can be attributed to a lot of different causes, and this is a matter of great interest to local communities and individuals affected by job losses.

The optimism expressed in the AICPA survey about company prospects also generally extended to employment, with a large majority of companies expecting to add to or keep the same workforce levels. Over all respondents, approximately 40% expected a moderate or substantial increase in workforce, and nearly half expected no change. This was remarkably similar to the results in June and December 2004.

When company sizes are probed, however, there was a significant difference in the number of large companies (i.e., those with over $1 billion in sales) with plans for downsizing. Among this group, 22 percent expected to decrease overall workforce size, compared with only 12 percent in the general population.

According to Census Bureau data, large companies have been responsible for a majority of job growth from 1988 to 2001. Employment grew from 87.8 million in 1988 to 115 million in 2001, or roughly 30 percent. Firms with under 20 employees grew by only 12 percent during this period, from 18.3 million to 20.6 million. On the other hand, firms with more than 500 employees expanded from 39.9 million to 57.7 million, or nearly 44 percent. See generally http://www.census.gov/epcd/www/smallbus.html

Given the large portion of employment provided by these giant firms, it stands to reason that changes in their employment outlooks will affect more people. Although some changes in employment are good for consumers – bringing lower costs for products – and for investors – yielding more profit from efficiency gains, the impact on the individuals is significant and disruptive when large firms make large movements.

Not reflected in these figures are the entrepreneurs who start small businesses and work on their own. A 2002 Census estimate indicates that 17.6 million businesses are nonemployers, which is up 14 percent from 15.4 million firms in 1997. (By comparison, total employee figures were up about 12 percent from 1996-2001).
See http://www.census.gov/epcd/nonemployer/2002adv/us/US000.HTM
These businesses had receipts totaling $770 billion, or about $43,000 per firm. Some of the biggest areas for businesses without employees are construction, real estate, professional, and personal services. Some of these businesses may not fully support an individual or family, but they do provide a source of economic vitality.


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