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RESEARCH The Ups and Downs of Small Business Employment

Nearly half of all employees in the United States are employed by a small business. Moreover, small businesses are credited with creating 52 percent of net job growth1 and account for a significant share of personal income, given their average annual payroll of $45,000 per employee.

However, many public data sources that speak to the contribution of employment from the small business sector provide data on job counts often measured only once per year from surveys.

With small business optimism at its highest point since 19802 and more companies claiming to plan for increased investment and continued hiring, it’s more critical than ever to understand the small business employment landscape to ensure that, as a country, we are providing the necessary support to make these intentions a reality.

By analyzing 65 million anonymized transactions from a sample of 45,260 Chase small business customers, the JPMorgan Chase Institute has published a new report, "The Ups and Downs of Small Business Employment", that uses a granular view of actual payroll growth and volatility to better inform the employment profile of individual small businesses.

While payroll expenses in part reflect job counts, they also provide a more granular and high-frequency view of employee income. Combined with the Institute’s findings published in the "Cash is King: Flows, Balances, and Buffer Days" report, this new report also shows the precarious financial landscape that many employer small businesses must navigate.

Following are the key takeaways from this new research:


  • Finding One: Payroll for most small employer businesses grew by less than the equivalent of one full-time employee in a calendar year, with median annualized payroll growth of 8.5 percent.


  • Finding Two: Payroll expenses were a material outflow for employer small businesses, which held fewer cash buffer days than nonemployer small businesses.


  • Finding Three: Most employer small businesses experienced unstable payroll and employment volatility including job gains and losses and other spikes and dips in payroll.


  • Finding Four: The typical small employer business experienced substantial volatility in payroll outflows, and volatility was highest for younger small employer businesses.


  • Finding Five: Small employer businesses with more volatile payroll patterns tended to have fewer cash buffer days.


These findings suggest that those who seek to help small businesses should focus on helping small employer businesses better understand and manage payroll and employment volatility, which can benefit both small business owners and employees.

To read the full findings, you can view the press release here and the full report here.

The goal of the JPMorgan Chase Institute is to help decision-makers use better facts, timely data, and thoughtful analysis to make smart decisions to advance global prosperity. Our hope is that the insights in this new report can inform policymakers, business leaders, and others as they confront challenges including inequality, climate change, and transportation infrastructure.


Diana Farrell

Founding and Former President & CEO