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.
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.
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.
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.
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.
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.