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Employment in the middle market is set for reconstruction following a difficult year

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Forward-looking components in the RSM US Middle Market Business Index imply that midsize firms are ready to expand hiring and bolster compensation over the next six months as the real economy reopens and enters a hyper-competitive post-pandemic period.

We expect middle-market hiring will boom ahead of the April U.S. employment report, which will be released on Friday. It is highly likely that the private sector will generate more than 900,000 jobs for the second straight month.

While it is encouraging that 59% of respondents to the RSM US Middle Market Business Index survey in March indicated that they were ready to move strongly in hiring, there is still some ways to go until employment conditions in the middle market return to their pre-pandemic levels.

Our estimation of midsize-business employment using ADP private-sector payroll data indicates that middle-market employment remains roughly 2.13 million jobs short of its pre-pandemic level in February 2020.

Since last May, midsize companies have added back 2.76 million jobs following the 4.9 million private-sector jobs lost in the March-April period last year.

That compares with the 3.74 million jobs generated by small firms and 4 million jobs added by large firms over that same period following the 5.37 million jobs lost by small firms in March and April last year and 9.31 million jobs shed by large firms during that same time frame. The March ADP estimate is quite different from the Bureau of Labor Statistics data, so all of these are likely to be substantially upgraded.

During the long economic winter, we have often noted that the midsize firms that comprise the backbone of the American real economy fared better than smaller businesses, and, because of their resilience, did not shed the jobs the way that large firms did.

It is not surprising that midsize firms have added back roughly 26% of all jobs generated since the bloodletting stopped last May compared with the 35% in the small category and 38% in the large category.

For more information on how the coronavirus pandemic is affecting midsize businesses, please visit the RSM Coronavirus Resource Center.

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About Joseph Brusuelas

@JoeBrusuelas

Joe Brusuelas, “chief economist to the middle market,” is the preeminent voice championing issues and policies facing midsize companies in the United States and around the world. An award-winning economist, Brusuelas has more than 20 years’ experience analyzing U.S. monetary policy, labor markets, fiscal policy, international finance, economic indicators and the condition of the U.S. consumer.

A member of the Wall Street Journal’s forecasting panel and the UCLA Anderson School of Management's Board of Directors, Brusuelas regularly briefs members of Congress and other senior officials regarding the impacts of federal policy on the middle market and the factors by which middle market executives make business decisions. He also frequently offers his insights on the U.S., Canadian and global economies in the financial media. In 2020, he was named one of the 100 most influential economists by Richtopia. In December 2023, Brusuelas and the economics team were recognized on Bloomberg's list of Best Bond Forecasters after correctly predicting where the benchmark Treasury would end the year.

Before joining RSM in 2014, Brusuelas spent four years as a senior economist at Bloomberg L.P. and the Bloomberg Briefs newsletter group, where he co-founded the award-winning Bloomberg Economic Brief. Earlier in his career, he was a director at Moody's Analytics covering the U.S. and global economies for the Dismal Scientist website. He also served as chief economist at Merk Investments L.L.C. and chief U.S. economist at IDEAglobal.

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