This Week's Herman Trend Alert

Leadership in Normal 2.0

  The Herman Trend Alert

May 15, 2013

Accelerating the Jobs Engines

Around the world, when we look at where the bulk of the jobs are coming from, interesting facts emerge. Research shows that small firms have high failure rates. Consequently, most small firms do not add many jobs long-term. Though large firms may create jobs, they also cut jobs and frequently move them around the globe for cost or strategic reasons. The one segment of the economy that is the biggest source of net job creation is the 'midmarket'.

In the United States, midmarket companies, with revenues between $10 Million and $1Billion number 195,000, provide 34 percent of the jobs, and account for 31 percent of the private sector Gross Domestic Product of the country ($3.9 Trillion annual revenues). Unfortunately, when it comes to job creation, this important midmarket market segment is usually combined with small companies.

According to the latest US census, a significant 44 percent of net job growth comes from the midmarket. And these new jobs are local where their workers spend their wages in their communities. Since consumer spending accounts for 70 percent of the GDP, solving the jobs problem is imperative to having a robust economy. Obviously, what is good for the midmarket is good for the country.

For many policy makers, the midmarket doesn't exist as a distinct segment. "The midmarket is a political orphan without the lobbying clout of big business or the votes that come from millions of legitimately small businesses", said Ram Iyer, President of the Midmarket Institute*. He believes that when the midmarket is considered as a separate segment, it will become readily apparent that it is the true jobs champion of the American economy. Moreover, he asserts that helping these companies succeed will result in increased jobs and local economic prosperity will follow.

According to the Organisation for Economic Co-operation and Development (OECD), small and medium enterprises in Latin America account for nearly 99 percent of businesses and employ up to 67 percent of its employees.

The sooner politicians around the world comprehend the value of this midmarket segment, the sooner countries across the globe will accelerate their jobs engines.

* The Midmarket Institute is an organization that focuses on helping midsize companies and those that serve them and is located in Princeton, New Jersey.

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