New Homebase research reveals the biggest hiring benefits of the smallest business

Summary: Consistent with economic research, the largest companies using Homebase hire job seekers with the highest target hourly wages. Surprising though, I see some small companies using that Homebase recruitment Software – with only one to four employees – is willing to pay 10% more than 20-49 employees, giving them a new competitive edge in a challenging market for talent.

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Recruitment is at the top of the mind these days, as businesses of all sizes continue to compete for workers in a tight labor market. And, given that one of the most consistent outcomes in the labor economy is the fact that Large companies pay higher wages Compared to small companies, you want to expect little competition in terms of salaries of the largest employers.

Interestingly, in my own recent study of Homebase Recruitment Data, I find an amazing result: Companies with one to four employees are willing to pay 10% more than a potential 20-49 employee company – making these businesses competitors.

Source: Home-based Recruitment Data (January 2021 – March 2022). Note: Total number of employees, state, month, year, month * year, specific business description (e.g., grocery store, pet store, consultancy) and Ln (target hourly wage) to select job role to predict regression results (e.g., Chef, Baker). Control for NAICS codes or rough business details gives comparative results; Unlike state MSA, the control for city or zip codes gives consistent results, as is the case with models without control. Considering the size of the business employee as a continuous variable with a square-term yield comes to a consistent conclusion. Strong, clustered (by the standard error bar of the establishment. Model F = 32.77 ***, R2 = 0.22. The total number of all employee index variables p <.05 (two-tailed test) is statistically significant for 100 to 249 indicators. Variable.

How can the smallest company offer a higher wage?

One explanation is that the smallest companies generate sufficient revenue to ensure the target wage premium, based on size-adjustment. Looking at the sales data for a selected sub-sample of homebase customers, I can predict the ratio of a company’s monthly earnings to the total number of employees – and see that the smallest companies enjoy a productivity advantage. They earn about $ 4,500 more per month than companies with 20 to 49 employees (baseline division for comparison). Whereas, the largest companies in the homebase sample have the lowest sales ratio of 7 employees

Source: Home-based Recruitment Data (January 2021 – March 2022). Note: Results adjust for state, month, year, zip code and NAICS code. Considering the size of the business employee as a continuous variable, a square-term yield comes to a consistent conclusion, as is the case with a fractional logistic model. Strong, clustered (by standard error bar of establishment. Model F = 45.25 ***, R2 = 0.79. Total number of all employee index variables p <.05 (two-tailed test) 10 to 19 is statistically significant for the index. Variable. From analysis. Excluding companies with the highest sales (e.g., 75th percentile or higher) do not change the results, nor do they control for the state or MSA, as opposed to the zip code.The largest firm category is excluded due to sub-sample size considerations.

Does the smallest company offer a higher wage at all?

There are many factors in my analysis that could explain the high target wages, including job location, industry, and season. However, there are some instances where the smallest companies offer lower target wages than companies with 20 to 49 employees:

  • Food & Beverage: The smallest companies in this category pay about 4% less.
  • Introduction with a target wage of $ 15 or less: The smallest companies in this segment offer a wage deficit of about 3.9%.

Operational considerations

Researchers often define and measure “large” companies with more than 10,000 employees, and “small” companies with 100 or fewer employees. However, there is considerable managerial difference between a company with one to four employees and 20, 60 or 100 employees.

Big business is often bureaucratic, formal, rigid and standardized. They tend to be strong and dignified and have advantages that help them organize and manage More efficient and economical. Its annual ranking The best company to work with Without fail, the list of the largest companies in the country. So, not surprisingly, many of those who rank are companies New college graduates aspire and apply to work.

Smaller businesses are often more collegial, familial, flexible and Authentic. These businesses accounted for 16.2% of total employment in the United States in the second quarter of 2022. And about 64% of all new firm job gains (since most businesses start small). On the other hand, most of the job losses in closed companies occur in small companies.

For many of these very small companies, using Homebase Recruitment may be the first job posting they make, or the first job outside the “circle of friends and family” involved in the business. Furthermore, hiring a company implies that there is a (projected) level of demand for the company’s products or services that the current employee base cannot comfortably meet. Such growing companies may not be common to all very small businesses.

Conclusion

It is difficult to recruit Even at the best of times. But like a hot labor market The United States is currently facingRecruitment can be frustrating and frustrating for all employers – in particular, The smallest. Small companies don’t have the same brand equity as big companies, which means they often have to spend more time, effort and money to reach – and then educated and confident – potential employees a good place to operate their small (but strong!) Businesses. .

A higher target wage – made possible by a productivity edge – could put many small businesses in a better position to compete with larger employers for hourly workers. Of course, it is also important to consider that the needs and desires of employees are changing at work and in the workplace. When considering only one factor candidate as salary Comparison and evaluation of competitive offersEmployers of all sizes must compete to attract – and even retain – employees today to keep up with their growing preferences.

Method:
Use Homebase recruitment data, January 2021 – March 2022 Thousands of job posts have been analyzed. These job posts are basically for Working hours. Homebase hiring data offers an important analytical advantage because a high proportion of job posts include the proposed “target wages” for a particular job and time. (This allows for a clean assessment of how companies of different sizes determine wages without the confusion and confusion that can occur when a researcher can only observe accepted wages.) Analysis based on accepted wages may obscure this fact. Different job seekers are attracted to different types (and sizes) of companies. In addition, the wages received may be the result of negotiations between the job seeker and the employer. Strong candidates-And especially those who have competitive offers-Usually will accept higher wages, all other equals. Focusing on the target wage set by an employer before any possible discussion is not the subject of this same analytical complexity.
Wage analysis: Target wage analysis accounts for location, year, month, year and month, industry and most frequently employed role. Location was measured in a variety of different ways (e.g., state, MSA, city, zip code), and industry was measured at different levels of detail (e.g., NAICS code, thicker sections, specific sections (e.g., “sit-down restaurant”). Regardless: Companies with the lowest (1-4) total number of employees were willing to pay higher wages to potential employees. For the smallest companies, the target wage premium was 10% higher than the total number of 20-49 total employees (reference department). Was about 12.7% in the home and repair department.
Strength test: In order to ensure that employers in certain industries / roles are organized and tend to work in smaller companies, job posts with a target wage of more than 30 hours were excluded. With this limitation, the size of the wage premium of the smallest company is large (about 6.4%) and highly statistically significant. (Maximum fixed wage premium is approximately 14.4% excluding these higher paying jobs.) Job posts with custom descriptions (a way of measuring “unusual cases”) offer a wage premium of about 6% vs. standard role target, all the rest being equal. This, however, did not explain the wage premium of the smallest company.

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