Idaho’s small employer establishments continue to grow

Small businesses continue to be the core drivers of employment growth throughout Idaho when considering both new establishments and overall contribution to total employment. However, large entities may have had more success in recruitment during the tight labor market of the past year due to name recognition, overall position growth and movement within the company, along with larger job listing budgets.

The average employer establishment in Idaho had approximately 11-12 workers over the past year, and more than 90% of Idaho’s covered employers have hired fewer than 20 people per year on average over the past four quarters.

Key employment metrics based on employer size for the past 12 months as of third quarter 2022:

92% of Idaho’s employers hired fewer than 20 employees.
Fewer than 200 employers in Idaho hired more than 500 employees. These large employers make up less than 1% of total employers who pay unemployment insurance taxes but 27% of total statewide employment.
Idaho added nearly 6,000 employer establishments in the year ending Sept. 30, 2022, with 97% of them having fewer than 20 employees and all in the private sector.
One-year share of total employment by industry: professional and business services 33%, financial activities 12%, construction 12%, and health care and social assistance 10%.

Did small or large employers provide most of the job growth over the past year?

Job growth comes from a combination of existing employers adding jobs along with the opening of new employer establishments. Total covered employment in Idaho for the year ending Sept. 30, 2022, increased by approximately 4% over the previous year. Total employer accounts increased by 9%, and employees per establishment declined by 4%. Of the new employer establishments within the past year, 97% hired fewer than 20 employees with average employment of one to two jobs per new account.

These new small businesses were overwhelmingly concentrated in the industries of professional and business services (33% of all new establishments), financial activities (12% of all new establishments), construction (12% of all new establishments), and health care and social assistance (10% of all new establishments). Combined, establishments with fewer than 20 employees in these four industries alone made up 65% of all net new establishments statewide.

For the purposes of this analysis, an active employer account is one that showed employment over the past year. Any employer account that reported zero employment over the past year was excluded from the analysis. Consistently active employer accounts include entities with continuous, ongoing employment between the fourth quarter of 2020 and the third quarter of 2022. It excludes those entities that opened or closed during the period.

When comparing one-year growth rates for employer establishments that have been consistently active employers for the most current two years (fourth quarter 2020 through third quarter 2022), 58% of total job growth was from employers with fewer than 20 employees in the base period that ended third quarter 2021.

Approximately 47% of these existing establishments experienced job gains, 38% experienced employment declines and 15% held steady over the past year. As the size of the employer increases, the ratio of establishments where employment grew also rises, meaning that large establishments are more successful in open position recruitment and/or simply have higher capacity for overall growth. Only 45% of very small continuing employers — up to five employees for the period ended third quarter 2021 — realized job gains in third quarter 2022, while 60% of large employers with more than 500 employees increased employment.

Of the top 100 existing employers in Idaho, 64% had higher employment than they did one year earlier compared with 36% that realized job declines. The top 100 existing employers all have more than 700 employees per establishment and are comprised mostly of school districts, universities, local governments, retailers, manufacturers and hospitals.

All establishment growth over the past year has been due to private sector expansion. However, due to the large amount of new, small employer accounts added over the past year, private employment per establishment declined by 0.4 jobs in third quarter 2022 compared with third quarter 2021 despite overall employment growth. On average, a private establishment in Idaho hires approximately 10 employees compared with 110 employees per government establishment.