New Study Shows Significant Footprint And Strong Growth For PEO Industry

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National Association of Professional Employer Organizations (NAPEO)

Sep 11, 2015, 02:45 ET

PHOENIX, Sept. 11, 2015 /PRNewswire-USNewswire/ -- Professional employer organizations generate between $136 and $152 billion in gross revenues, provide services to between 2.7 and 3.4 million workers, and offer HR, benefits, and compliance assistance to between 156,000 and 180,000 small to mid-size businesses, according to a new study released today by the National Association of Professional Employer Organizations (NAPEO) at its annual conference in Phoenix.

The study, by noted economists Laurie Bassi and Dan McMurrer of McBassi and Associates, is the third in a series. Previous studies conducted by Bassi and McMurrer have shown that businesses in PEO arrangements grow faster, have lower employee turnover, and have a significantly higher rate of business survival than businesses that don't use PEOs.

The new study also showed that 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.

"This study proves through hard data that the PEO industry is a vibrant, impactful, and growing sector of the U.S. economy," said NAPEO President Pat Cleary. "PEOs provide clear competitive advantages to their small and mid-size business clients, and more and more businesses are embracing the PEO concept and capitalizing on the benefits of using a PEO."

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.

"As this study highlights, the PEO industry is larger than the agricultural industry in the U.S., and comparable in size to the federal government and the education sector. Combined with last year's passage of the Small Business Efficiency Act creating IRS recognition of the industry, it's evident that PEOs are poised for even greater growth and impact," said Cleary.

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™ and represents about 85 percent of the industry's estimated $136-$152 billion in gross revenues. NAPEO has 300 PEO members, ranging from start-ups to large publicly held companies with years of success in the industry, as well as some 200 service provider members. PEOs provide payroll, benefits, and other HR services to small and mid-sized businesses. For more information about NAPEO, please visit www.napeo.org.

SOURCE National Association of Professional Employer Organizations (NAPEO)