Middle Market Comines Are Fueling Economic Growth

Despite comprising only 1% of the total number of commercially active firms1 in the country, middle market companies have led national job growth over the past five years, employing nearly 53 million workers – more than double the number employed by this segment in 2011. Middle market firms are also contributing $9.3 trillion to the U.S. economy, according to the Middle Market Power Index from American Express (NYSE: AXP) and Dun & Bradstreet (NYSE: DNB).
Using Dun & Bradstreet’s proprietary database of commercially active U.S. firms, the latest report in the Middle Market Power Index series analyzes the characteristics and economic impact of middle market enterprises—defined as businesses generating between $10 million and $1 billion in revenues—focusing on growth trends over the past five years.
According to the report, while the total number of all commercially active firms declined between 2011 and 2016, the number of middle market firms nearly doubled, with an increase of 87%. Middle market firms generate just over one in four dollars (26%) of U.S. business revenues and employ more than one in four workers (27%) in the private sector. Since 2011, middle market companies have outpaced both smaller businesses (less than $10 million in revenues) and the largest companies (more than $1 billion in revenues) in both employment and revenue growth.
“Over the last five years, middle market companies have led the way in economic growth,” said Brendan Walsh, Executive Vice President, U.S., American Express Global Commercial Payments. “This report highlights the often overlooked economic might of these companies, which contribute over $9.3 trillion to the U.S. economy and are growing faster than any other sector.”
“Middle market firms continue to have an outsized influence on the U.S. economy,” said Jeff Stibel, Vice Chairman of Dun & Bradstreet. “These firms have led the charge hiring Americans and now employ nearly 53 million people. The middle market plays a pivotal role in our rapidly changing economy.”
Middle market companies are headquartered across the country. However, the ten states in which middle market firms comprise a greater than average share of companies include: Illinois (1.5%), Wisconsin (1.5%), Michigan (1.3%), New Jersey (1.3%), Indiana (1.2%), Kansas (1.2%), Massachusetts (1.2%), North Dakota (1.2%), New York (1.2%) and Ohio (1.2%).
In addition to these ten states, higher than average percentages of middle market firms are also found in Washington, D.C. (2.1%), Puerto Rico (5.8%), and the U.S. Virgin Islands (3.6%).
Roughly 6 percent of all commercially active firms are majority women-owned, compared with 7% of middle market firms that have majority women -ownership. Looking at minority ownership across all commercially active firms, only 2% are minority-owned, compared with 5% among middle market firms. Thus, in terms of gender and ethnic diversity, firms that are women-owned are just as likely to be found in the middle market as in other business size groups, and minority business owners are more likely than average to be found in the middle market (revenues of $10 million to $1 billion).
Among the 18.9 million firms with less than $10 million in annual revenue, there are roughly one million that generate revenues between $1 million and $9.9 million, signifying the greatest potential to approach the middle market. These firms make up 5% of the population of commercially active small businesses, generate $2.8 million in revenues and employ 28 workers on average. These small businesses that have reached $1 million or more in revenue are more likely to be women- or minority-owned (10% and 6%, respectively) and also more likely retail trade or construction businesses than any other business size group.
Middle market firms span all industries, but are more likely to be found in the manufacturing sector (18% vs. 3% overall), followed closely by wholesale trade (17% vs. 4% overall). Twelve percent of middle market firms are found in retail trade, compared to 11% of all commercially active businesses in the country. Within the services sector, both educational services and health services are home to 6% of middle market firms, respectively. Altogether, nearly 60% of middle market firms are found in these five industries.

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