October Employment Report

By Stephen Singer, October 8, 2013

Due to the government shutdown, I cannot analyze this month’s jobs data as the Bureau of Labor Statistics will not be publishing their monthly report for September. Instead, I’ll look at the distribution of private sector employment by firm size and address a common – and costly — mistake made by thousands of collection organizations.

First, let’s take a look at the data. In Tables 1 and 2, I break down the distribution of firms and private sector employment by number of employees. The data comes from the Bureau of Labor Statistics-National Business Employment Dynamics Data by Firm Size Class. This report is currently updated through 2012. If you review multiple reports you will see that  while the gross numbers change month-to-month and year-to-year, the percentages by employment class remain constant.

Table 1 shows the distribution of private sector firms by the number of employees they have.

Table 1
Distribution of Private Sector Firms Size Class:2012/Q1
Number of Employees	Number	Percent	Cum Percent
1 to 4	2,692,000	55.5%	55.5%
5 to 9	956,000	19.7%	75.2%
10 to 19	583,000	12.0%	87.2%
20 to 49	378,000	7.8%	95.0%
50 to 99	126,000	2.6%	97.6%
100 to 249	74,000	1.5%	99.1%
250 to 499	22,000	0.5%	99.6%
500 to 999	11,000	0.2%	99.8%
1000 plus	10,000	0.2%	100.0%
	4,852,000	100.0%
Source: US Bureau of Labor Statistics
Not Seasonally adjusted

 

As the above table shows, most US employers are very small. Almost 87.2 percent of all private sector employers employ fewer than 19 employees. Only 10,000 companies employ 1000 or more employees.

The distribution of Private Sector Employment is also heavily weighted towards small employers.

Table 2
Distribution of Private Sector Employment by Firm Size Class:2012/Q1
Number of Employees	Number	Percent	Cum Percent
1 to 4	5,508,000	5.1%	5.1%
5 to 9	6,287,000	5.8%	10.9%
10 to 19	7,850,000	7.3%	18.2%
20 to 49	11,392,000	10.6%	28.7%
50 to 99	8,638,000	8.0%	36.7%
100 to 249	11,204,000	10.4%	47.1%
250 to 499	7,739,000	7.2%	54.3%
500 to 999	7,591,000	7.0%	61.3%
1000 plus	41,769,000	38.7%	100.0%
	107,978,000	100.0%
Source: US Bureau of Labor Statistics
Not Seasonally adjusted

 

Table 2 shows that 61.3 percent of all private sector employees work for firms with fewer than 1000 employees.

This data addresses a common mistake many collection organizations make in their employment skip tracing process. I speak to thousands of collection organizations, and many believe that the Worknumber Database, which covers firms with 1000-plus employees, is a representative source of current employment information.

In fact, this approach misses more than 60 percent of all private sector employment.  Employmentskiptracing.com’s system taps into multiple databases that include both the Worknumber and small and medium sized employers. That means we cover more employers and deliver higher hit rates and therefore higher collections for our clients.

The message for collection organizations is clear: you must tap into employment data for large, medium, and small employers or you will miss a substantial portion of your debtors’ employers.