US employment has largely returned to pre-pandemic levels since the COVID-related disruptions. But this recovery hasn’t been even across the labor market. So we use FRED* to illustrate the recovery in employment according to establishment size: 1-19, 20-49, 50-249, 250-499, and 500+ employees.

Before the pandemic, employment across all establishment sizes had been slowly increasing. Predictably, employment dropped in March 2020 for all size categories.

• For the smallest establishments (1-19 employees), employment dropped the least and recovered the fastest; however, employment in these establishments has fallen slightly since the end of 2021.
• For establishments with 20-49 employees, 250 to 499 employees, and 500+ employees, employment has followed a similar pattern, increasing above employment levels from 2020.
• For mid-range establishments with 50 to 249 employees, employment dropped the most and recovered the slowest.

Employment across all establishment sizes is now above the levels in January 2020. And while the initial drop in employment came from COVID-19 for all establishments, it is unclear why the various drops and recoveries have been so uneven across establishment sizes. One possible explanation is the agility of smaller firms and the deeper resources of large firms. The smallest establishments could remain at work or go back to work faster due to lower risk of exposure to COVID given a smaller number of employees. The largest establishments also have the resources to establish COVID procedures and testing to help employees get back to work.

The mid-range establishments may have struggled more than other size groups because their number of employees was too large to return without rigorous prevention measures and too small to have the resources to fight for and secure scarce COVID-19 tests. Business applications for new firms have increased, and new firms tend to be small. This could also explain why small firms saw the smallest decline and fastest recovery.

*Notes about the data: The data set is from Automatic Data Processing Inc. (ADP), which defines an establishment as a single physical location engaged predominantly in one activity and covers US nonfarm private employment. To focus on the employment patterns before and after the pandemic, we index the employment level to January 2020 (right before the pandemic) and graph the data from 2018 to the latest observation available.

How this graph was created: Search FRED for “Small Establishments” and select “Nonfarm Private Employment in Small Establishments with 1 to 19 Employees.” Select the orange “Edit Graph” button to get to the “Add Line” section, where you’ll search for “Small Establishment” in the search bar and select the series “Nonfarm Private Employment in Small Establishments with 20-49 Employees.” Repeat for “Medium Establishments” and “Large Establishments.” Use “Edit Line 1” to change the units to “Index (Scale value to 100 for chosen date),” which is “2020-01-01,” and select “Copy to all.” Finally, change the start date of the graph to 2018-01-01.

Suggested by Maggie Isaacson and Hannah Rubinton.