Professional employer organizations (PEOs) provide comprehensive HR solutions for small and mid-sized businesses. These services frequently include payroll, employee benefits, HR, workers’ compensation, risk management, and more. In white papers released in previous years, we have found PEO clients enjoy a wide range of improved financial and non-financial outcomes relative to their peers who do not use PEO services. These benefits include higher business survival rates, higher growth rates, lower employee turnover, and higher employee satisfaction.
The COVID-19 pandemic has provided a new set of challenges that all businesses have confronted over the last year and a half. This white paper explores the effect that PEOs have had on business outcomes for their clients over the course of the pandemic to date, building on findings in the 2020 NAPEO white paper that undertook a short-term analysis of PEO impacts during the initial months of the pandemic. In particular, this paper explores how PEO clients have fared from early 2020 through July 2021 across a range of different measures in the following broad categories:
- Business operations;
- Changes in employment; and
- Success in accessing major government support programs.
Overall, we found that, as of July 2021, PEO clients are doing better in each of the three categories, as discussed in additional detail in the sections below. As a result, PEO clients are also in a stronger position for future long-term success than other comparable small businesses.
Since the pandemic, relative to comparable small businesses, PEO clients:
- Are 58% less likely to have permanently closed;
- Are 32% less likely to have seen a negative overall effect on business from the pandemic;
- Are 82% more likely to have business operations back to normal (or better);
- Have had employment grow by 6% since early 2020 (compared to a 1% decline for comparable small businesses);
- Have a rate of employment growth over the last 6 months that is 81% higher;
- Are 18% more likely to have had their 2020 PPP loans forgiven; and
- Are 71% more likely to have received PPP loans in 2021.