The PEO Industry Footprint in 2021 Laurie Bassi and Dan McMurrer, McBassi & Company May 2021
Professional employer organizations (PEOs) provide comprehensive HR solutions for small and mid-sized businesses by supplying them with a broad array of cost-effective HR offerings and expertise. This enables PEO clients to concentrate on growing their businesses while offering superior benefits and HR practices to their employees. Research in our previous white papers has shown multiple positive effects from these services: PEO clients enjoy a better chance of survival, higher growth rates, lower employee turnover, higher employee satisfaction, and they fared better during the COVID-19 pandemic.
NAPEO’s White Paper series aims to help the general public and small business owners better understand the economic impact and value of the PEO industry and the ways working with a PEO can help businesses grow and thrive.
Our white papers have shown that:
- Businesses in a PEO arrangement grow 7-9 percent faster, have 10-14 percent lower turnover, and are 50 percent less likely to go out of business.
- PEOs are able to offer a broad array of HR services at a lower cost and offer access to retirement plans to small businesses that may not otherwise sponsor them.
- PEOs provide services to 175,000 small and mid-sized businesses, employing 3.7 million people.
- There are 907 PEOs in the United States.
- The total employment represented by the PEO industry is roughly the same as the combined number of employees for Walmart (United States only), Amazon, IBM, FedEx, Starbucks, AT&T, Wells Fargo, Apple, and Google.
- The PEO industry’s 175,000 clients represent 15 percent of all employers with 10 to 99 employees.
- Administrative costs are around $450 lower per employee for businesses that use a PEO.