Recruiters need to keep in mind that small to mid-sized business (fewer than 500 employees) is vital to the health of the America economy. While placements with large firms are eagerly sought after, small business should not be neglected! According to an article in USAFacts.org¹ “Small businesses are 99.9% of all businesses in the US (and) as of July 2024, there are 34.8 million small businesses compared to 19,688 large businesses.” The article goes on to point out that “small businesses make up the vast majority of businesses and the majority of job growth.” A statistic from the Chamber of Commerce² noted that “in 2024, small businesses contributed about 43.5% to the U.S. GDP (and) consequently, large businesses were responsible for approximately 56.5% of GDP. So, we can see the large impact that small business has on the overall economy.

The pandemic spurred on the entrepreneurial spirit as demonstrated in the graphic below.

While not all the potential new startups will result in the need for direct-hire or contract workers, the sudden wave of entrepreneurial spirit is impressive. This wave is showing no signs of ebbing anytime soon.

Many existing small businesses which have survived through the pandemic and recent economic pressures will likely need recruiters to help them find employees, especially in the very tight labor market we are presently experiencing. With the advent of business-friendly initiatives by the new administration, competition for employees is likely to be fierce. Improved cash flow will enable existing and new small businesses to expand their operations to meet increasing consumer demand. Recruiters should consider their target markets and do research on small businesses which may be in a growth mode.

According to the U.S. Department of Labor, today’s workforce³ is made up of the following groups:

*Baby Boomers (born 1946 – 1964): 15%

* Generation X (born 1965 – 1980): 27%

* Millennials (Gen Y, born 1981 – 1996): 34% 

* Generation Z (born 1997 – 2012): 18%

Further statistics from the DOL indicate that the trends for the proportions noted above are flat for the GEN X and Millennials and rapidly growing for the Gen Z group. Recruiters should be aware of these demographic trends and how they may affect the labor market.

Another interesting aspect of the “David vs Goliath” competition between small and large businesses is the trust factor. A Pew Research Center study⁴ “found that 86% of U.S. adults believe small businesses have a positive effect on the country’s direction, whereas only 29% feel the same about large corporations.” Alex Panas and Axel Karlsson with McKinsey.com⁵ report that Gen Z “exhibits a broad distrust in most large corporate institutions.” So, we can conclude that a typical Gen Zer would be more likely to go to work for a small company which fits better with their belief system. Victoria Petrock of Emarketer⁶ cites that Millennials’ “trust … in companies has declined over recent years, with only 50% expressing trust in businesses overall.”

So, what is the upshot of all this? The answer is that there is an ever-growing segment of the labor pool that has an aversion to larger companies. This pool of workers may well find more satisfying careers with smaller enterprises. The smaller firms are more likely to be flexible in their work hours and in-office vs remote work.

Recruiters should try to identify small businesses that are likely to prosper in today’s dynamic marketplace and develop a pool of candidates who would be prone to prefer small vs large firms. Since many smaller firms may still be somewhat risk averse, you should be prepared to offer candidates on a contract basis to allay their fears. Get set up in advance with an EOR to handle these contract placements since contract hires can fill an employer’s immediate need until direct hires are found.

If you would like to discuss any of these ideas or would like help defining a business strategy, please feel free to give me a call or contact me at judy@jcsrllc.com, or visit my new website at https://www.jcsrllc.com for more information.

¹ USAFacts Team, “What role do small businesses play in the economy?” USAFacts, November 24, 2024.

² Stephanie Melhorn, Makinizi Hoover, and Isabella Lucy, “Small Business Data Center.” U.S. Chamber of Commerce, May 20, 2024.

³ U.S. DOL, “Changes in the U.S. Labor Supply.” August 2024.

⁴ Cindy D. Cam, “Nobody Roots for Goliath: Why Americans Trust Small Business.” Pew: Trend Magazine, October 17, 2024.

⁵ Alex Panas and Axel Karlsson, “Mind the Gap – Curated Reads on Gen Z in the Workplace.”  McKinsey & Company, October 2024.

⁶ Victoria Petrock, “Gen Z doesn’t trust big business.” EMarketer, November 12, 2021.

Read More By Judy Collins