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Recent Study Shows Significant Footprint And Strong Growth For PEO Industry

| 10/8/2015

Oct. 8, 2015, Alexandria, VA — In light of the recent announcement by Morgan Stanley Global Private Equity (MSPE) that it has completed a majority investment in professional employer organization CoAdvantage, Inc., the National Association of Professional Employer Organizations (NAPEO) is highlighting its September 2015 study on the PEO industry’s economic footprint. The study, by noted economists Laurie Bassi and Dan McMurrer, showed that PEOs generate between $136 and $152 billion in gross revenues, and provide HR, benefits, and compliance assistance services to between 156,000 and 180,000 small to mid-sized businesses, employing between 2.7 and 3.4 million workers.

 

Key Findings of An Economic Analysis: The PEO Industry Footprint:

 

  • The current size of the PEO industry is between $136 and $156 billion, as measured in gross revenues.

     

  • PEOs provide HR, benefits, and compliance assistance services to between 156,000 and 180,000 small to mid- sized businesses, employing between 2.7 and 3.4 million workers.

     

  • There are between 780 and 980 PEOs currently operating in the United States. They employ between 21,000 and 27,000 people internally.

     

  • The PEO industry has grown significantly. In each of the last 30 years, the industry has added, on average, roughly 100,000 worksite employees and 6,000 net new clients. For perspective, that means that every five years, the PEO industry has added the employment equivalent of the entire utilities industry in the

    United States.

     

  • The estimated 2.7 to 3.4 million employees who benefit from PEO services is a number larger than the size of the entire agriculture/forestry industry in the United States (and close to the size of the federal government, the education sector, or the information sector), based on data from the Bureau of Labor Statistics (BLS).

 

The economic analysis examined a variety of data sources, including NAPEO membership data; BLS data; NAPEO’s 2014 Financial Ratio and Operating Statistics Survey; Hoovers/Dun & Bradstreet data on all companies classified as PEOs by Hoovers; and detailed administrative data from five selected states.

A copy of the full study is available here.

About NAPEO:

The National Association of Professional Employer Organizations (NAPEO) is the Voice of the PEO Industry, with a membership of 300 PEOs of all sizes and 250 industry service partners. PEOs provide payroll, benefits, regulatory compliance assistance, and other HR services to small and mid-sized companies. Through PEOs, the employees of small businesses gain access to employee benefits such as 401(k) plans; health, dental, life, and other insurance; dependent care; and other benefits typically provided by large companies. PEOs provide services to between 156,000 to 180,000 businesses employing between 2.7 and 3.4 million people and generate between $136 and $156 billion in gross revenues annually. For more information about the PEO industry and NAPEO, please visit www.napeo.org.

 

Media Contact

Kerry Carruthers
703.739.8171
kcarruthers@napeo.org