I read an interesting blog the other day about the effect that the construction industry has on small businesses. Small businesses created 15,000 new jobs in February 2013, totaling 75,000 new jobs since February of last year. While small business employment is slightly up, the number of jobs gained is still less than its proportionate share of all employment. If small business employment were growing at its usual proportionate rate of 15% of national employment, those 75,000 new jobs would be about 300,000 – that a 400% difference!
Susan Woodward, who is the economist who worked on Intuit’s Small Business Employment and Revenue Indexes, says that this can be accounted for by the housing bust, as construction firms are the most vital businesses to small business employment. In non-recession times (remember those?), construction industry jobs make up about 5% of all employment, but it compromises nearly 20% of jobs in the small business segment. This is why when the housing market suffers, small business employment suffers as well. Woodward says that until the housing market recovers, we will not see robust recovery in small business employment.