The Economic Divide Between Big and Small Companies Is Growing (msn.com) 42
While America's largest corporations are riding a wave of surging profits and AI-fueled stock market enthusiasm to record highs, small businesses across the country are cutting staff and scaling back operations as years of high inflation, cautious consumers and tariff confusion take their toll.
Private firms with fewer than 50 workers have steadily shed jobs over the past six months, according to payroll processor ADP, cutting 120,000 positions in November alone. Midsize and large firms continued adding jobs during the same period. The divergence mirrors what's happening among American consumers.
The Federal Reserve's latest beige book noted that overall consumer spending declined further even as higher-end retail spending remained resilient. Workers at small businesses tend to earn less than those at large companies, and stock market gains from large public company shares flow mostly to wealthier Americans. Small businesses -- those with up to 500 workers -- employ nearly half the American workforce and represent more than 40% of GDP, according to the U.S. Chamber of Commerce. But their profits are slightly lower than a year ago, per a Bank of America Institute analysis. Net income at S&P 500 companies rose 12.9% from a year earlier in the third quarter.
Private firms with fewer than 50 workers have steadily shed jobs over the past six months, according to payroll processor ADP, cutting 120,000 positions in November alone. Midsize and large firms continued adding jobs during the same period. The divergence mirrors what's happening among American consumers.
The Federal Reserve's latest beige book noted that overall consumer spending declined further even as higher-end retail spending remained resilient. Workers at small businesses tend to earn less than those at large companies, and stock market gains from large public company shares flow mostly to wealthier Americans. Small businesses -- those with up to 500 workers -- employ nearly half the American workforce and represent more than 40% of GDP, according to the U.S. Chamber of Commerce. But their profits are slightly lower than a year ago, per a Bank of America Institute analysis. Net income at S&P 500 companies rose 12.9% from a year earlier in the third quarter.
Obviously? (Score:1)
The lowest value a company can have is zero. As corporate valuations increase along with inflation and other factors, that gap increases and it'll hold true for every step along the distribution.
A better way to put this might be something like "Small companies are getting smaller".
Re:Obviously? (Score:4, Insightful)
You forget about debt, so companies can be worth less than $0. Stock prices and "market cap" may have $0 being at the bottom though.
Stratification (Score:2)
These numbers need to be split into
- The largest 10 stock exchange traded companies
- The rest of the S&P 500
- Everyone else
Nearly all of the revenue and earnings growth have been in the largest 10 companies, everyone else is either not really growing or shrinking.
The 25+ year business strategy of lots of companies has been to cut costs and slowly buy back stock. That has led to stagnation and eventual decline.
Below inflation revenue growth included as well.
Simple solutions are always wrong (Score:1)
Care to clarify what your FP was supposed to mean? And couldn't you have thought of a less vacuous Subject? The Subject can help clarify your intentions.
Me? I remain fixated on solution approaches, even though that feels like some sort of sacrilege on Slashdot these years. I do think the story is about a real problem that is helping to destroy capitalism and the societies based thereon, but what are any of us going to do about it? Apparently nothing. I sure feel that I'm not going to get there from here...
I
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Really? More moderation abuse for the annual transition? Hope that it's part of the end of a bad year rather than the start of another bad one? Since the abusive moderation was "Redundant", I guess that justifies replicating the reaction?
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And more thoughts about the problems with determining which part of the profits came from where, but... No interest in solutions around today's Slashdot, so...
That's what happens when the rules are stacked (Score:1)
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Trickle down economics causes more damage than Republicans want to admit.
It's called job creators now (Score:1)
It's the same thing, give everything to the top and it'll come on down for you.
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Not even close. Clearly you aren't doing much business, and you aren't a homeowner.
I received dozens of small company recommendations from my real estate agent when I bought my first house. They mostly turned out to be really good small companies. They charged less than the big box stores and did really good work.
You end up spending about 3% of the value of your house each year on average on stuff the house needs, so those savings add up pretty quickly.
For example, high winds blow over old fences and kno
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There are many small businesses out there, but most have a handful of employees or fewer, maybe just one. It seems to be very difficult for them to grow past that stage, especially when they hit certain magic numbers of employees that require them to provide more services to them or to do more reporting. It looks like the system is designed to all but require M&A to grow past that point.
Funny choice - to use "cutting staff" as a metric (Score:3)
Those aforementioned "largest corporations" are also doing that.
Small vs large business (Score:2)
Small businesses have less reserves and react to the economy immediately.
Large ones take more time to react but can survive short term down terms due to their large piles of cash.
Also which are you calling small businesses - upto 50 or upto 500? Those are radically different definitions used in that post.
Personally 50 or smaller is a large business, but 400 definitely seems like a mid sized company to me. I would even say that if you employ 100 people, that is pushing it to call it small. If you have tha
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*correction: 50 or less is a small business.
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Small Business is not efficient (Score:1)
We all know the story of the big company pushing out the small ones. Now the major irony is the places and people that outcome most effects are in fact supporting policies that are accelerating that outcome. We in America we like small business, we venerate it and I think on the net that's a good thing, we've enjoy our entrepreneurial spirit but we also have to accept that left to "the market" alone most of them will be destroyed by the bigger companies and that's why we do in fact subsidize and protect s
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On top of that if we really want to help small businesses let's stop them from having to provide health insurance
How would small businesses attract employees, then? In the USA, you'd be bonkers to take a job that doesn't provide health insurance.
Now, as it happens, I ran a profitable small business from 1999 through 2018---but in Canada, not the USA. We have publicly-funded healthcare, so health insurance is not such a big issue, and it definitely helped my business compete with US businesses that ha
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publicly-funded healthcare.
I'll be more explicit next time but that was what I was getting at. It's a silly thing to have to attract employees with.
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publicly-funded healthcare.
I'll be more explicit next time but that was what I was getting at. It's a silly thing to have to attract employees with.
Not silly for the American worker. Often it's the only way for them to get affordable health insurance.
What's silly (and tragic) is that the USA is the only wealthy industrialized nation that does not have publicly-funded health care for everyone.
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Not silly as is it reality or not silly in that it shouldn't be. That's a silly way to say that sir. I am an American worker, I just had my open enrollment period, I'm well aware of how silly it all is.
Half the nation votes to keep it that way, we're 15 years in and still arguing over whether the ACA was good or not. Maybe this subsidy row will be a tipping point. Republicans might dare to eliminate pre-existing condition requirements and then I think that might push enough people over.
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Sorry, I do see your point. Yes, it is silly for American workers to be subjected to all of this. And I was also an American worker (retired now.)
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Thank you for illustrating precisely why we have the fucked up system we have.
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In the USA, you'd be bonkers to take a job that doesn't provide health insurance.
Why? If you're healthy you don't need insurance.
What if you develop a disease or get in an accident? Healthy people are not completely immune to bad stuff happening.
In the decades I've been working I can count on one hand the number of times I have needed to use insurance. All that money I've been paying has been wasted since the only way to get your money back is to be ill or get injured.
Consider yourself lucky if the money you pay for insurance ends up being "wasted."
Instead of paying for insurance, that money can be given directly to you in the form of a higher salary. You can then use that money for necessities or invest it so if something does happen to you you have the resources to pay for it.
Alas, that kind of naïve thinking persists in the population. Very few of us have the resources to self-insure. Even wealthy people buy health insurance. Lack of health insurance threatens your net worth, not to mention your ability to pay for care.
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We in America we like small business
Which is why everyone buys at Amazon, Wallmart, Costco, Home Depot, Starbucks, ...
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And Congress's approval rating is 10% but everyone really loves their Congressman. I guess should have said we say we care about small businesses.
People are driven by incentives but what we feel doesn't match reality, it's a tricky part of economics. But at every Presidential debate or listen to any politician they'll talk about and be asked about small business. News media interviews the owners, I guess we could say it really is just a virtue signal but let's face it a lot of people don't have the choic
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Thanks chief that totally changes the argument now. Those 7 points means everyone loves congress actually.
Winner Take All, we grovel for scraps (Score:1)
The rich get richer, the big get bigger, the rest fight for scraps. This applies to nations also. China is the cheapest manufacturer of non-trivial products in part because everything is in one big metropolis: Guangzhou area. Specialists in anything related to manufacturing are just around the block. Tim Cook realized America can't match that without first matching it. Building a new local factory to supply special parts just for one customer (Apple) isn't economical. The same factory in China typically wou
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Ever *read* Marx? He was right about all of it, because he was collecting data and describing what was in front of his eyes.
His prescriptions to cure it failed only because they didn't scale.
The megamillionaires and the billionaires bought enough legislators to rig the tax system, so that they pay next to nothing. And then they make sure they only deal with other large companies... which is why family farms don't exist, and small, local eyeglass manufacturers and denture manufacturers and machine shops are
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"Pure" socialism has yet to work well anywhere. Competition motivates people in ways altruism and platitude lectures can't. Thus, the best bet is to find a good mix of capitalism and socialism.
The variance in the data (Score:1)
Read the article. There was no mention of the difference in variance between large and small firms, regarding hiring. Why is the important? Because if hiring of small firms has greater a variance than larger firms, than one would expect a greater deviation over time in hiring patterns. That is, it wouldn't be unusual to see small firms hiring less, at any given point in the data. If, however, the variance was very similar to each other, than it's far less likely to see this divergence.
So, I used Google to s
More signs of a soft economy (Score:2)
More signs of a soft economy. This strikes me as scary because I really do think we're experiencing a major stock market bubble but usually with these big bubbles the whole economy gets a lift. We're not seeing that this time around which makes me think that when this current bubble bursts it's going to be especially bad for most of the economy. I guess we'll all see in the next couple years or so.
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The rich voted themselves lower taxes year after year for decades and now there's not enough gas to make the car go, and they blame the little people they're driving over like they're nothing but speed bumps.
Eventually ... (Score:2)
The solution is IPOs (Score:2)
The solution is IPOs. Tap the equity investor market in exchange for cash. The equity markets are huge. Except all the trillionaires holding provate control of these companies don’t want to give up any control, deal with pesky shareholders, or meet transparency requirements. They want to borrow an infinite amount of money, offload the default risk, and keep the corporate growth for themselves.
Boo-hoo for the billionaires. I’m actually
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Predictable result of Citizens United (Score:1)
How are those mergers and acquisitions going 4 ya? (Score:2)
There's a saying... (Score:2)
It goes "Unlimited growth increases the divide". The western world - and arguably the world as a whole - has been pursuing and rooting for unlimited growth for a long time now. And the divide between The Rich and The Rest - in income, wealth, power, and security - has been growing as well, exponentially.
For the extremely wealthy, that's a feature of insufficiently-restrained capitalism. For the rest of us, it's a sometimes-fatal bug.
For the story behind the saying I quoted, see https://thetyee.ca/Culture/20 [thetyee.ca]
wealth redistribution lol (Score:1)
break em all up into a thousand pieces