Small Tech and Service Companies Continue Hiring in Q1 2008

Recent news about the national employment market has been consistent with broader concerns about recession in 2008.  Last week’s BLS report indicated that payroll employment declined by 232,000 in the January-March quarter, and that the unemployment rate rose to 5.1 percent in March. 

TriNet sees a different picture among high-wage technology and non-banking professional services employers with 400 or fewer employees. These companies continued to hire and grow at about the same pace as in 2006 and 2007.  Employment growth seems to be moderating, and small companies continue to experience rising health-care costs, but small, high-wage companies expanded their workforces in Q1 2008. 

Here’s how we see it:

Study Population: High-Wage Small Technology and Services Companies

TriNet studied hiring and compensation patterns from 2006 – 2008 at more than 600 companies averaging about 26 employees in 39 states, with median salary around $75,000. More than 90% of the companies are professional services, technology or non-bank financial service businesses.  All companies in the study were TriNet clients for the entire period (2006 – present).

Continued Hiring in Q1 2008: Fewer Companies Hiring More New Employees

While the number of companies hiring decreased slightly from 2006 – 2008, the pace of hiring actually accelerated, with just over 1900 new hires in the population in Q1 2008 vs. about 1800 in Q1 2006.  Average company size increased from 19.5 employees to 26.7 employees at the end of Q1 2008. 

Some Indications Of Moderating Growth

Total employment in the study companies grew by 21% from 2006 – 2007, but growth slowed to 13% from 2007 – 2008.  80% of the companies increased employment between Q1 2006 and Q1 2007, but only 70% of companies grew between Q1 2007 and Q1 2008.  Median salary remained flat at $75,000. 

Overall, TriNet sees moderating but continued employment growth over the past two years.

Increasing Health Care Costs

Small high-wage companies are choosing to pay significant shares of employee health insurance costs to attract and retain productive employees.  Over the 2-year period, companies in the study population increased their average annual health care investment per employee by more than 30%, to about $6600 per employee.

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TriNet recognizes that the employment practices and challenges of high-wage technology, financial services and professional services companies are different from those of the general US business population. Your Human Capital Consultant would be glad to set up a time to share more of our findings about how these companies are making the most of their investment in people