If you’re hoping your next job will be at a company all your friends have heard of, the odds may be stacked against you. Not because of your resumé — but because the overwhelming majority of hiring happens at smaller employers.
While smaller employers have long accounted for most hiring, more than 92% of hires in May came from US business establishments with fewer than 1,000 employees, according to federal government data.
The very smallest businesses have gained an even larger share in recent years. In the early 2000s, businesses with up to 49 employees accounted for about 40% of hires. That figure began to climb in the years following the pandemic and briefly topped 50% in January.
“Hiring has fallen across the labor market, but the decline has been less pronounced among small employers,” said Cory Stahle, an economist at Indeed.
Why smaller employers are gaining ground
After Iren Azra Zou was laid off by Amazon last year, she decided to focus her job search on smaller companies. Within two weeks, she’d landed an engineering job at a tech startup.
“There are countless small and mid-sized companies doing interesting, meaningful work,” she said. “I see a lot of people limit themselves because they think it’s either Big Tech or something boring.”
While some large companies are still hiring aggressively, economists say several factors have shifted hiring toward smaller employers. Aaron Terrazas, an economist at the HR services platform Gusto, said one explanation is differences in how companies staffed up during the pandemic.
Large companies with greater access to financing could ramp up hiring more easily, Terrazas said, while smaller businesses generally stayed lean. Some large employers believe they overhired and have scaled back, he said, while smaller businesses have been better positioned to keep adding workers.
That leaner staffing also makes hiring more urgent when vacancies do arise, Stahle said. With fewer workers to absorb the workload when someone leaves, small businesses often need to replace them more quickly.
Terrazas said AI is also contributing to small-business hiring in two ways: by helping some existing businesses grow faster and by making it easier for entrepreneurs to start new businesses.
“We’re seeing more of those new business owners succeed in growing and expanding their staff,” he said.
Yousuf Imran is among those who have joined the wave of entrepreneurship. In April, he left his account executive role at Google to start a business focused on AI sales tools. He’s currently running the company as a solo founder, working with a small team of engineers, marketers, and other contractors.
Business Insider is speaking with workers who’ve found themselves at a corporate crossroads — whether due to a layoff, resignation, job search, or shifting workplace expectations.
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The big-company hiring gap
The biggest employers account for a surprisingly small share of hires, and this isn’t a new phenomenon. Over the past two decades, establishments with 5,000 or more employees have consistently made up just 1% to 2% of hires.
Part of that could be an artifact of how the data is reported. Some large employers may be reported as multiple establishments depending on how they’re structured, Stahle said. An individual office of a large company, for example, could fall below the 5,000-employee threshold.
Hiring hasn’t shifted toward establishments with 1,000 to 4,999 employees, either. The main change in recent years has been the growing share of hires at businesses with 1 to 49 employees. Their share has exceeded 50% only five times since 2001, with four of those instances coming since 2020.
The biggest establishments also appear to hire less than their number of job postings might suggest. In May, they accounted for roughly 3% of job openings but less than 2% of hires, a pattern that has persisted in recent years.
The opposite has been true for establishments with between 50 and 999 employees. They accounted for about 39% of job openings but roughly 43% of hires in May.
If not for the healthcare sector — which is dominated by large employers and has remained a major source of hiring in recent years — the gap between small- and large-business hiring would be even wider, Terrazas said.
Read more about people who’ve found themselves at a corporate crossroads
Looking beyond the household names
Landing a job at a big-name employer may be the goal for many job seekers. But in today’s labor market, their best chance of finding work could be at a company they’ve never heard of.
“There might be less competition and some opportunities for you as a job seeker if you’re open to learning more about some of these smaller to mid-sized companies,” Stahle said.
Do you have a story to share about looking for work? Reach out to the reporter via email at [email protected] or on Signal at jzinkula.29.
