Small Firms Have Big Role In Job Gains
May 5, 2005
By RITU KALRA, Courant Staff Writer
Small businesses put more people
to work in Connecticut than their larger counterparts over the
past eight years, but paid their workers significantly less, a
new study by the state Department of Labor shows.
Businesses with fewer than 50 employees
accounted for 96.7 percent of the state's private sector growth
between 1996 and 2004, the report said. Small companies hired
nearly 50,000 employees during that period, but large companies
pared payrolls by 10,235 workers.
Although small establishments out-hired large firms, they also
paid their workers less. Small businesses accounted for 44.3
percent of total private sector employment as of last March,
but only 33.6 percent of wages.
On average, workers at small firms earned $813 a week, compared
with $1,278 a week at large firms - a difference of $465, or
Some portion of the wage gap between small and large firms can
be explained by the large impact that CEO salaries have on the
data. United Technologies Corp. chief executive George David
took home nearly $100 million last year, for example, including
$5.1 million in direct pay, $8.3 million of options, and $83.6
million realized by cashing in options from prior years.
Edward Doukas, a research analyst at the state Department of
Labor who conducted the study, said Wednesday that he could not
quantify how much outliers such as David and other CEOs skewed
the numbers, but he was not surprised by the results - including
the finding that wage growth at large firms nearly doubled growth
at small firms during an eight-year period.
Wages at small firms grew by 36.6 percent between 1996 and 2004,
compared with 63.4 percent at large businesses.
"It pretty much confirmed what we expected to see," said
Doukas, who published the results of his study in the May issue
of the Connecticut Economic Digest. "Maybe the total employment
number at small businesses was higher than I'd anticipated. But
overall I don't see any great surprises in there."
Reprinted with permission of the Hartford Courant.
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