Hear about the 1 percent lately? No, we’re not referring to the super-wealthy class of Wall Street financiers or investors. There is another 1 percent very active out there — a group that has a vast, important and healthy influence on our world.
It’s not a secret society, either: In fact, you may work in this group, or be a co-owner in it. We’re referring to the U.S. middle market business segment — a very dynamic slice of our economy, which, regrettably, does not get enough credit for its accomplishments. So indicates a recently released report from Dun & Bradstreet and American Express, titled: “The Middle Market Power Index: Catalyzing U.S. Economic Growth. The report focuses on the characteristics and importance of middle-market firms, and how they have fared since the 2007-2008 recession.
The researchers note that the middle market — comprising firms generating from $10 million to $1 billion in revenue — makes “an outsized contribution” to the American economy. While these companies only represent 1 percent of U.S. businesses overall, they have a surprisingly pervasive influence. Consider that these firms:
- Generate sales of almost $6.2 trillion (based on 2014 numbers)
- Account for 21 percent of business revenues
- Employ more than 50 million workers
- Account for 28 percent of the private sector workforce
The Quiet But Deep Middle Market
Sure, we hear about giant enterprises all the time. We can’t avoid it, as they are always making news, such as when they miss or exceed earnings estimates, or when one of their CEOs leaves abruptly, or if the company divests or acquires a business. One reason we tend not to follow the middle is that most of these companies — some 98 percent — are privately owned, and average only 368 workers each.
On the other hand, 57 percent of companies with $1 billion or more in revenue are publicly traded, so they must obey disclosure laws that don’t apply to privately held firms. And given these enterprises employ an average of 23,226 people each, anything they do is going to make a very obvious public impact. So it’s easy to see why the bigger companies get the lion’s share of attention
What Lies Beneath: It's Pretty Cool
But much of what is most interesting, exciting and relevant to us and our national economy (and our local communites) is well under the mainstream media radar. This is unfortunate, because it’s important we see how the middle segment generates economic growth. In fact, since 2008, it was the middle market that created 92 percent of the 2.3 million net-new jobs added by commercially active companies. These hires are “fueling the nation’s economic recovery,” states the report.
Need more proof of how hot an area this is? To cite a few more stats: The middle market accounts for more than one in five dollars of revenue generated by U.S. businesses, and employs one in four of their workers. Also, these firms, on average, generate $45.1 million in annual sales. They are present in just about every vertical (however, typically we find them in services, wholesale or retail trade, and manufacturing). Clearly, this is a segment well worth exploring and the report is a fine to place to start.