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  • Represents the smallest businesses in the U.S., which
    employ more than half of non-farm private employees
  • Our data comes directly from Intuit software—not from surveys
  • The only small business indexes updated monthly from real data
  • Based on a statistically sound methodology

Intuit Small Business Indexes

Our indexes are designed to provide statistically sound data and insight into small business trends and behavior. We collect actual data from Intuit software users, analyze the numbers, and publish monthly so you can follow the pulse of small business today. What sets our indexes apart?

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About the Intuit Small Business Employment Index

Overview | Methodology | FAQS | Archive | About the Economist

The Intuit Small Business Employment Index is a measure of employment for firms with fewer than 20 employees. It is derived using aggregate and anonymous online employment data for approximately 170,000 small business employers, a subset of the more than 1 million businesses using Intuit Payroll. These smallest employers are important to the economy as they comprise 87 percent of the total U.S. private employer base and employ 19.4 million people. 1

Each month, the US Bureau of Labor Statistics reports employment statistics from its two monthly surveys, the "establishment" or "payroll" survey, which is a survey of employers, and the "household" survey, a survey of households, also known as the Current Population Survey. BLS reports many statistics from these surveys each month, including total employment, private employment, employment by industry, employment by age, location, sex, and education levels of workers, but offers no detail on employment by firm size.

BLS does report levels of employment by firm size each year in its Business Economic Dynamics division ( http://www.bls.gov/bdm/ ). Figures come from a census of state unemployment insurance records, and are a count of the universe of payroll employees. The levels of employment at the end of the first quarter (March) are reported the following November. Thus, the reported figures by firm size are seven months old when reported, and are 19 months old by the time the next report is released.

The goal of the Intuit Small Business Employment index is to provide a forecast of the current level of employment for firms with fewer than 20 employees that BLS will report when it next releases the BED data. To construct this forecast, we use a combination of data from Intuit's small business payroll service customers, data from BLS on payroll employment (from the establishment survey) and self-employment (from the household survey). The forecast model measures the relationship between past BLS levels of employment for small firms to total payroll employment, private payroll employment, construction payroll employment, self-employment, plus an index of employment built from data from Intuit Online Payroll customers.

The index forecasts employment levels for all firms in the United States with fewer than 20 employees. It is not an index of employment for Intuit's customers. However, using the level of employment for Intuit's customers improves the forecasting power of the model.

Intuit provides geographic detail on small business employment. Changes in small business employment are reported by Census Division and for the individual states in which Intuit has more than a thousand customers for its online payroll service.

Intuit also reports compensation per employee and hours worked for small firms. Intuit publishes the data at the beginning of each month just prior to the Employment Situation release from the Bureau of Labor Statistics. The National Employment Index shown in the above chart is total nonfarm payroll employment from the Bureau of Labor Statistics' monthly establishment survey.

As with the government data, there may be revisions to the Intuit Index numbers. These revisions reflect the use of new data from Intuit plus new data from the Bureau of Labor Statistics that are used in re-computing the estimates. New data can change the values for previously reported months.

About Intuit Payroll

Intuit is the No. 1 payroll provider with more than 1 million customers. It provides a range of fast, easy and accurate payroll solutions to meet a variety of small business needs. These include do-it-yourself payroll solutions such as Intuit Online Payroll as well as do-it-for-me solutions such as Intuit Full Service Payroll. Intuit also offers easy-to-understand and affordable small business employee benefits and insurance including employee healthcare, 401(k) retirement plans and worker's compensation insurance.

1 Business Employment Dynamics data by firm size class, first quarter 2011

Complete Methodology White Paper

Small Business Employment Index

The Employment Index is intended to report the level of employment for all firms in the US that have 1 to 19 employees. The Bureau of Labor Statistics reports, via its Business Employment Dynamics (BED) program, very high quality employment counts for this category (gathered from State unemployment insurance records) but it reports them with a long lag. The goal of the Intuit index is to provide an earlier estimate of employment for this category. Data from Intuit's own payroll customers are an important input to the index. The index should not be interpreted as a measure of employment changes for Intuit's customers, but for national small business employment. Data from Intuit's payroll service customers are used to calculate changes in employment using a "same-stores" method. Each month, we compute the percentage change in employment from one month to the next using exactly the same set of customers ("same-stores"). The set of customers changes each month, so the measurement is the change, for each pair of months, for customers who are present in both the earlier and the later month.

We build a model, using regression, of small business employment that relates this month's level of small business employment to last (and several lagging) months' total payroll employment, private payroll employment, construction payroll employment, self-employment, and the same-store index series from Intuit's customers. The payroll data come from the BLS establishment survey, and the self-employment data come from the BLS household survey. We use this model to forecast current small business employment as reported by the BED program.

The resulting estimates are seasonally adjusted using X-12-ARIMA (auto-regressive integrated moving average), software developed and maintained by the U.S. Census. The Intuit data for employment exhibits strong seasonal effects very similar to those seen in non-farm national employment data. Particularly, there is a sharp drop in employment each January (roughly 2 percent), rising employment through the spring, and another drop, though not quite as sharp, in late summer.

Small Business Employee Hours Worked

For the hours per employee series, we divide total monthly hours for hourly employees by the total number of such employees and report the seasonally-adjusted trend. This series has a clear relation to the economy overall.

Small Business Employee Compensation

For monthly compensation per employee, we divide the total compensation for all employees, including the business owners themselves, by the number of employees, and report the seasonally-adjusted trend. The result is not adjusted for inflation. Again, this series has a clear relation to overall economic activity.

1See http://www.bls.gov/bdm/bdmfirmsize.htm
What is the Intuit Small Business Employment Index?

The Intuit Small Business Employment Index is a set of three related measures all tracking relevant changes in national small business employment data. Each has been adjusted for seasonality and is based on a set of approximately 170,000 employers. Unlike survey data, the Intuit Online Payroll data is electronically generated from payroll records in near real-time.

The Small Business Employment Index is the flagship index, as it provides a top-level view of change in employment at small businesses with fewer than 20 employees. It also measures small business employment by geography. The other two measures shed light onto other aspects of small business employment: monthly hours worked and monthly total compensation per employee. Together, they give a rich view of small business employment activity on a monthly basis.

  • Small Business Employment Index represents the national monthly level of employment in small businesses.
  • Small Business Employment by Geography represents the monthly level of employment by U.S. Census Divisions and for individual states in which there are more than 1,000 small firms represented.
  • Small Business Employee Hours Worked represents the level in monthly hours worked per employee (utilization) in small businesses.
  • Small Business Employee Compensation represents the monthly levels of compensation per employee in small business.

What is the purpose of the Index?

According to the U.S. Bureau of Labor Statistics2, small businesses with fewer than 20 employees continue to be the largest set of employers. They make up 87 percent of all U.S. employer firms and employ about 18 percent of all persons employed, which is nearly 20 million people. It's therefore clear that these smallest of small businesses have a large impact on the U.S. economy. However, details on the level of small business employment are reported only annually for the first quarter of each year, with a long lag. The U.S. Bureau of Labor Statistics' monthly employment survey (reported as the National Employment Situation Report) does not break out statistics specific to small businesses, and is dependent on surveys filled out by hand and reported by phone for the small business component of total employment.

To fill the gap in a lack of timely small business employment reporting, we created the Intuit Small Business Employment Index. It is designed to provide statistically sound insight into small business employment trends and behavior and show how these small businesses play a key role in the economy that is different from that of larger businesses. Because the Index is created with online payroll data, it is available close to real time at the beginning of each month, faster than most other employment indexes.

"We believe that it's important to understand what's happening with employment on a month-to-month basis among the smallest of small businesses. This insight gives us a more complete picture of the health of our overall economy and is often critical when understanding specific labor trends," said Ginny Lee, senior vice president and general manager of Intuit's Employee Management Solutions division.

"When we started exploring the data currently available, we were surprised to find that few companies that have data on small businesses analyze it to provide current, monthly insight about the small business economy. The Intuit Small Business Employment Index is constructed from electronic, and thus pristine, payroll data to show what is happening in the national small business economy. As leaders in small business payroll, with an understanding of the nuances in small business employment, we believe it is important to step in and fill that gap," continued Lee.

How is your Index different than the numbers put out by the Bureau of Labor Statistics (BLS)?

The Intuit Small Business Employment Index is constructed from data coming entirely from small businesses. We report not just employment, but monthly hours worked and compensation. The BLS reports national employment monthly, but does not break out employment for small businesses in the monthly reports.

Additionally, the Intuit Small Business Employment Index is derived from an aggregation of electronic payroll data, whereas BLS depends on surveys that are filled out by hand and returned by mail or reported by phone.

Why do you have three measures that make up the Index?

We believe it's important to give a detailed perspective about the overall employment picture, and the combination of employment along with hours worked and compensation help provide that. For example, in talking with small businesses, we know they want to try to keep great employees through tough economic times. One way to do this is to reduce hours. The three views presented in the Intuit Small Business Employment Index help provide insight into those behaviors.

When will your Index be available?

The 2014 calendar is shown below. Each release will represent a full month of data, through the 23rd of the previous month, pulled on the 24th.

Month Release Date
December 2013 01/07/2014
January 2014 02/04/2014
February 2014 03/04/2014
March 2014 04/01/2014
April 2014 04/30/2014
May 2014 06/03/2014
June 2014 07/01/2014
July 2014 07/30/2014
August 2014 09/03/2014
September 2014 09/30/2014
October 2014 11/04/2014
November 2014 12/02/2014
December 2014 01/06/2015
How many firms are represented in your Index and how does that compare to the Bureau of Labor Statistics numbers?

The Intuit Small Business Employment Index is based on a set of approximately 170,000 employers; the BLS surveys 140,000 businesses and government agencies. A key difference between the two reports is that the Intuit Index is not a survey and is based on real-time electronic payroll data. On the other hand, BLS constructs a random sample, while Intuit's data are from Intuit customers.

How is information in the geographic areas reported?

By U.S. Census Division:
This data reflects the change in small business employment across the U.S. by U.S. Census Divisions, aggregated from data from the Intuit customers in the States in each Division. It's based on aggregate and anonymous payroll data from approximately 170,000 small business employers who use Intuit Online Payroll. The month-to-month changes are seasonally adjusted and informative about the overall economy.

By State:
This measure shows the change in small business employment for the states in which Intuit Online Payroll has more than 1,000 small business firms represented. The month-to-month changes are seasonally adjusted and informative about the overall economy.

What's your methodology?

See the description of our methodology here .

How many customers does Intuit Payroll have and are all of these used in the Index?

Intuit is the No. 1 payroll provider with more than 1 million customers with both desktop and online payroll services. The Index is based on a sample size of approximately 170,000 employers who use Intuit Online Payroll. This is a subset and not the total number of Intuit Online Payroll users.

What steps has Intuit taken to ensure the privacy and security of its customers' account details used in the Index?

The data is pulled in aggregate from approximately 170,000 Intuit Online Payroll small business users. Since the number is provided in aggregate form only, it is not possible to use the Index to determine a specific small business's payroll data. To learn more about Intuit's Privacy Policy, visit: http://smallbusiness.intuit.com/small-business/privacy/index.jsp

How is your Index different than the numbers ADP puts out each month?

The Intuit Small Business Employment Index is focused exclusively on small business employers defined as firms (independent businesses) with fewer than 20 employees. The ADP monthly report is based on its customer base, which includes numerous large businesses, and breaks out small businesses as establishments (locations where people work) with fewer than 50 employees. The Intuit Small Business Employment Index is designed to provide a detailed look into the economic trends and behavior of the fewer than 20 employee segment. We believe that these small businesses play a key role in the economy that is different in interesting ways from that of small establishments, which can include branches or individual stores of bigger firms.

Does the Index reflect Intuit's base of Payroll customers or Intuit's business results for any period?

No. The percentage changes in employment reflect the conditions of the economy, and do not represent changes in Intuit's base of Payroll customers or Intuit's business results for any period. The Small Business Employment Index data is constructed to reflect employment activity in small businesses, after controlling for the changes in the composition of the Intuit Online Payroll customer base.

Why do you revise the previous month's results?

As with the Bureau of Labor Statistics data, there may be revisions to the Intuit Index numbers. These revisions are partly due to calculations using the latest month of new Intuit data. These calculations include re-computing seasonal factors and the moving average process used to obtain the curve, which can change the values for previously reported months. Changes to the data also arise from revisions to the government employment data that are used as inputs to the Intuit Index.

What is Intuit Payroll?

Intuit is the No. 1 payroll provider with more than 1 million customers. It provides a range of fast, easy and accurate payroll solutions to meet a variety of small business needs. These include do-it-yourself payroll solutions such as Intuit Online Payroll as well as do-it-for-me solutions such as Intuit Full Service Payroll. Intuit also offers easy-to-understand and affordable small business employee benefits and insurance, including employee healthcare, 401 (k) retirement plans and worker's compensation insurance.

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Intuit Economist Dr. Susan Woodward

The Intuit Small Business Employment Index has been constructed from Intuit Online Payroll data by nationally recognized financial economist Susan Woodward.

Susan Woodward is the founder of Sand Hill Econometrics, which publishes the Sand Hill Index, an index of value for venture-capital-funded companies. She has licensed this index to Dow Jones, which began publishing it as the Dow Jones Index of Venture Capital in the fall of 2009. Sand Hill Econometrics also provides measurement of risk and performance for alternative assets to institutional investors.

Woodward has a Ph.D. in Financial Economics from UCLA. She taught finance for the first 10 years of her career. She then served 10 years (1985-1995) in the government in Washington D.C., including four years as chief economist at the U.S. Department of Housing and Urban Development, and four years as chief economist at the U.S. Securities and Exchange Commission. She now lives in Menlo Park, California, and works on issues in both mortgage lending and securities.

Contact Us For questions and requests contact: index@intuit.com