Analyst: Recession Tougher On Smaller Employers

HARTFORD, Conn. (AP) — Staffing services companies that place employees at smaller companies are faring worse in this recession than in previous downturns, a reversal from the past, an analyst said Wednesday.

Analyst Ty Govatos of C.L. King and Associates said in a note to investors that during the 2001-2003 downturn, small businesses — those with fewer than 50 employees — accounted for only 12 percent of unemployment.

Businesses with more than 500 employees accounted for 44 percent of unemployment during that downturn, Govatos said.

In the current recession, "small businesses are struggling far more," accounting for 36 percent of unemployment compared with large businesses that account for 20 percent of joblessness, he said.

Those differences showed up in revenue declines in the fourth quarter of 2008, which Govatos said were steeper at staffing companies that place employees in small companies than peers that serve big companies.

In the fourth quarter, year-over-year growth declined between 20 percent and 28 percent at companies that staff small businesses and was down between 11 percent and 15 percent for firms that serve large accounts, he said.