According to a recent study, Professional Employer Organizations (PEOs) are experiencing employment growth 14 times higher than the growth rate in the overall U.S. economy. For example, the total employment represented by the PEO industry is the same as the combined number of employees who work at Walmart (U.S. only), Amazon, Google, Apple, IBM, FedEx, Starbucks, AT&T and Wells Fargo.
PEOs provide services like payroll processing, HR support, employee benefits, workers’ compensation insurance and regulatory compliance assistance and take on many employer responsibilities so business owners can focus on day-to-day operations and growth.
PEO Employment Growth Study Findings
The PEO Employment Growth study, conducted by economists Laurie Bassi and Dan McMurrer of McBassi and Associates, found the following:
- There are 907 PEOs in the United States.
- Those PEOs employ 3.7 million worksite employees.
- Annual wages in the PEO industry total $176 billion.
- 175,000 businesses partner with a PEO.
Over the past decade, the number of worksite employees in the PEO industry grew at a annual rate of 8.3 percent. However, the actual number of PEOs has remained largely the same as newly formed PEOs are offset by those that have merged, been acquired or gone out of business.
The study was recently shared at the annual National Association of Professional Employer Organizations (NAPEO) convention where President and CEO Pat Cleary said, “The outlook for continued growth and vibrancy is extremely bright for PEOs given the significant value proposition we offer to small and mid-size businesses: faster growth, higher profitability, and happier employees.”
To read more about how the study was conducted, a full copy is available here.
Previous studies conducted by the same group indicate that companies using a PEO experience higher revenue growth, increased profitability and greater employee satisfaction. One reason may be that partnering with a PEO allows small and medium sized business owners to affordably offer benefits to their employees when they may not otherwise be able to do so.
Through PEOs, the employees of small businesses gain access to employee benefits such as:
- 401(k) plans
- Health insurance
- Dental insurance
- Life insurance
- Dependent care
- Supplemental insurance like critical illness or accident plans
Offering a variety of benefit plans and providing human resources support allows PEO clients to attract and retain top talent which, in turn, helps their businesses grow. Previous studies also indicate that businesses that partner with PEOs have a significantly higher rate of business survival than those that don’t.
When businesses work with a PEO, they gain valuable products and services including:
- Benefits of deep HR resources to manage and mitigate risk
- Lower rates on workers’ compensation insurance
- Relief from many of the administrative burdens of benefits and payroll administration
- Convenient payroll options
- Mobile-friendly technology tools
Take this short quiz to find out whether partnering with a Professional Employer Organization makes sense for your business or see if FrankCrum is the solution to your HR outsourcing needs by calling 800-277-1620.