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New Report Shows Businesses That Use A PEO Fared Better During The Pandemic

| 9/27/2021

Small and mid-size businesses that use a PEO are 58 percent less likely to have permanently closed due to the pandemic and are 82 percent more likely to have business operations back to normal than comparably sized businesses, according to a new study released today by the National Association of Professional Employer Organizations (NAPEO).

The new research -- by noted economists Laurie Bassi and Dan McMurrer of McBassi and Company -- compared how PEO clients have fared compared to non-clients from early 2020 through July 2021 across a range of different measures in regard to business operations, changes in employment and success in accessing major government support programs. It showed that businesses that use a PEO:

  • Are 58 percent less likely to have permanently closed.
  • Are 32 percent less likely to have seen a negative overall effect on business from the pandemic;
  • Are 82 percent more likely to have business operations back to normal (or better).
  • Have seen a 6 percent growth in employment since early 2020 (compared to a 1 percent decline for comparable small businesses).
  • Have a rate of employment growth over the last 6 months that is 81 percent higher.
  • Are 18 percent more likely to have had their 2020 PPP loans forgiven.

“This study confirms that PEOs are the unsung heroes of the pandemic because they helped small and mid-sized businesses not only survive but thrive during the pandemic. From PPP loans to COVID protocols to the shift to remote work, PEOs have provided expertise and assistance every step of the way, and it shows in the way PEO clients have been able to emerge stronger than ever through this unprecedented challenge,” said Pat Cleary, NAPEO’s president & CEO.

The white paper is the 10th in a series. Previous studies conducted by Bassi and McMurrer have shown that businesses in PEO arrangements grow 7-9 percent faster, have employee turnover that is 10-14 percent lower, and have a significantly higher rate of business survival than businesses that don’t use PEOs. Their other research has shown a return on investment in cost savings alone of 27.2 percent, as well as higher revenue growth, increased profitability, and higher employee satisfaction for companies that use a PEO.

PEOs provide HR, payroll, benefits, workers’ comp, and regulatory compliance assistance to small and mid-sized companies. By providing these services, PEOs help businesses improve productivity, increase profitability, and focus on their core mission. 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.