Intuit recently released its “December Small Business Employment and Revenue Indexes” as well a special 2012 look back report. All data cited in the blog post and year-end report are based on a combination of government data and an anonymized subset of Intuit QuickBooks Online, Intuit Online Payroll, and QuickBooks Online Payroll users.
Intuit’s online payroll products enable it to anonymize and report on payroll data. Here are some interesting nuggets of information from the report:
Intuit counts small businesses as having 19 employees or fewer (it doesn’t measure by revenue). These stats can be a bellwether of sorts. The entire Northeast region looks depressed, including the Great Lakes, the Mid-Atlantic, and New England. The smaller the state, the more likely it will be either ranked very high or very low because random variation month over month is greater. The average hourly wage is about $15.75, and average total compensation is only $32,500, so these are not such well-paying jobs.
Services businesses and retail franchises are mostly small businesses and have lower wages. Adding more part-time workers (average 24 hours per week; most hourly people work fewer than 140 hours per month) reduces the compensation per employee (vs. full-time equivalent [FTE] employees). Depending on the state, I think 20 or so hours per week is the threshold for paying healthcare insurance for employees. If you add more part-time workers, are you actually increasing employment, or just reducing the cost per employee?
What the Data Reveals?
Hours worked and hourly wage calculations are based on hourly employees only, but compensation is based on everyone, including owners and other salaried positions. In Intuit’s data history, the fraction of hourly people working full-time reaches close to the peak for small businesses in August 2006, at 31.5 percent. The full-time equivalent (FTE) percentage fell from that peak, then rose as recovery began, and now is back to about 29 percent.
Adding more part-time people only lowers compensation (assuming that both existing and new employees have the same rate of pay) if relatively more part-time people are added. If people are added in a ratio that is the same as the existing ratio (71 percent part-time, 29 percent full-time), then, other things being equal, compensation should be constant. But if only part-time people are added, then overall compensation will fall. Between October 2011 and now, the percentage of FTE employees fell from 31 percent to 29 percent, so there was some downward force on overall compensation from this decline.
This is a great example of how Intuit is using data to create delight for customers with actionable insights, as one facet of the strategy it professed last year (for more details on Intuit’s strategy, see here). In other words, this is a great example of cloud apps generating big data for the vendor, which in turn can provide its customers and the general public with valuable insights and trends.