The Small Business Economy Explained - from the Gusto Insights Group

If the small-business economy had a theme in 2025, it was resilience in the face of mixed signals. The nation’s economy is growing strongly today, following a stumble last year. Hiring has stayed positive overall, despite growing at a slower pace than in recent years. Consumers kept opening their wallets even as they told pollsters they were worried. And the Federal Reserve finally began to deliver the interest rate relief that many small business owners had been hoping for.In this episode, we walk through our latest edition of the "The Economy Explained" for February 2026. Full article here: https://gusto.com/resources/gusto-insights/the-economy-explained-feb-2026?pagePath=resources&pagePath=gusto-insights&pagePath=the-economy-explained-feb-2026

The latest data on small-business hiring from Gusto shows that AI isn’t the “jobs apocalypse” for small companies that some have feared. Our evidence suggests that small businesses with more AI-exposed workforces are seeing revenue and hiring gains – not the dramatic job losses that some have predicted. There’s a learning curve, but early evidence points toward growth, not decline.In this episode, we explore a major new study from Gusto's Insights Group, "The Reality of AI’s Impact on Small Businesses: New Evidence from Gusto Payroll Data." Full study is here: https://gusto.com/resources/gusto-insights/ai-impact-on-smbs-2026

Much of the conversation around artificial intelligence focuses on job displacement – the fear that AI might automate away millions of jobs. But this narrative overlooks a practical and less-discussed impact that AI will have on jobs: the massive physical infrastructure required to power AI is creating surging demand for skilled trade workers around America.In this research, we examine how pay for several skilled trades is being impacted by the AI datacenter boom today. Read the full research here: https://gusto.com/resources/gusto-insights/ai-data-center-wage-growth

Starting in 2026, workers earning tips or overtime may see slightly bigger paychecks under new federal tax deductions created by the One Big Beautiful Bill Act (OBBBA).How much will paychecks actually change for the typical small business worker from these new deductions? In this episode we walk through new research from the Gusto Insights Group breaking down the numbers for small businesses and their employees. Full research here: https://gusto.com/resources/gusto-insights/taxes-tips-overtime-obbba-2026?pagePath=resources&pagePath=gusto-insights&pagePath=taxes-tips-overtime-obbba-2026

Hiring among America’s small businesses posted solid gains in January, adding +37,100 net new jobs for the month – slightly below the 12-month average of 52,400 jobs, but marking continued improvement from the October-November soft patch and a sharp year-over-year gain from January 2025’s -12,100 net job loss.In this episode, we break down the latest Gusto Small Business Jobs Report for January 2026.

Gusto’s analysis finds that small business owners typically earn about 40% more than their employees, reflecting their dual roles as workers, managers, and primary risk-bearers. Owner pay rose sharply during the post-pandemic recovery but has largely stalled since 2023, as inflation, tighter credit, and shifting demand increased pressure on small firms. The data shows that industry—not firm size—drives most pay differences, with owners in knowledge-based sectors earning several times more than those in consumer-facing industries. Importantly, owner compensation is highly flexible: when conditions tighten, owners often delay or cut their own pay first to stabilize cash flow and keep employee wages steadier. The findings suggest that owner pay acts as a key shock absorber for small businesses, helping firms navigate volatility while limiting downstream impacts on workers.

Gusto’s analysis reveals that missed payrolls among U.S. small businesses surged by over 50% between 2019 and 2025, a trend largely driven by inflation, high interest rates, and thin cash reserves. While these failures typically stem from temporary liquidity gaps rather than terminal business failure, they act as a "breaking point" that triggers lasting employment declines. Data shows that affected firms often reduce their headcount by 8% to 10% within six months, with staffing levels rarely recovering even two years later. The report highlights a widening liquidity divide, as stronger companies have expanded their cash runways while vulnerable firms continue to operate within days of a crisis. Ultimately, the research suggests that targeted financial interventions, such as faster credit access and better cash-flow tools, could prevent these temporary shortfalls from becoming permanent economic damage for millions of workers.

To close out 2025, many small businesses did something they hadn’t been able to do as confidently in recent years: share their success with employees. New data from Gusto shows that year-end bonuses rose sharply in both size and reach, with average bonuses jumping more than 11 percent and a growing share of workers receiving a payout. These gains were broad-based across industries, from tourism and entertainment to professional services and tech, pointing to underlying strength in the small-business economy even as uncertainty lingered. In this episode, we’ll break down what’s behind the surge in bonuses—and what it tells us about how small businesses are entering 2026.

The Gusto Small Business Jobs Report for December 2025 highlights a significant recovery in hiring among American small businesses with fewer than 50 employees. After a period of stagnation, small businesses added approximately 47,900 net new jobs, signaling a return to stable economic conditions as the new year approaches.In this episode we walk through the latest December numbers on small-business hiring from Gusto.

As we look forward to 2026, our economists took stock of the top small-business stories we saw unfold this year, and gathered them into 5 key trends we believe will help reshape the nation’s small-business economy in the coming year.Here are the 5 big trends we expect to shape the small-business economy in 2026 and beyond. Full analysis here: https://gusto.com/resources/gusto-insights/2026-smb-predictions

Here's the latest breakdown on the numbers for America's small-business economy for November 2025 from the Gusto Small Business Jobs Report -- a real-time view of hiring among the 400,000+ U.S. small businesses on Gusto.The TL;DR: Hiring among America’s small businesses was essentially flat in November, posting a modest -2,000 net job loss for the month — a sharp rebound from October’s revised decline of -37,900 jobs, but well below the 12-month average of 43,500 jobs added by U.S. small-businesses with less than 50 employees. However, below the surface there are pockets of strong hiring among small businesses in November, including health care, construction, and wholesale trade. By contrast, most job losses were led by small businesses in retail, hospitality, and professional services.

Gen Z’s white-collar careers are running into a bottleneck: hiring for 20- to 28-year-olds continued to remain flat this year, leaving young professionals competing for a limited number of openings. With each new class of graduates entering a market that isn’t expanding, early-career workers are finding it harder to land roles that match their skills, or to move up once they’re in the door.In this analysis, Gusto's Senior Economist Nich Tremper unpacks the data on entry-level hiring in white-collar fields. Full study here: https://gusto.com/resources/gusto-insights/gen-z-hiring-2025

An affordable and secure retirement is part of the dream of many U.S. workers. However, nearly 56 million U.S. workers lack access to an employer-sponsored savings plan. To expand access, Congress created the Small Employer Pension Program -- a federal tax credit that helps small businesses start a retirement plan. But uptake has been low. What happens when we show personalized tax credit savings estimates to small business owners? Answer: It has a huge impact on uptake of the tax credit. This episode walks through a study from Gusto Insights showing that the simple act of nudging small businesses led to $31 million of savings for U.S. small business owners.

Small businesses in America today face a paradox. On paper, the economy looks strong: GDP is growing at nearly 4%, consumer spending is healthy, and inflation is moderating. Yet business owners are seeing something different on the ground – weakening demand, falling consumer confidence, and a labor market that has cooled dramatically from its red-hot pace of recent years.

Are small businesses hiring AI-focused roles today? Most discussion of AI and hiring focuses on large, enterprise-scale companies. However, we found a small but growing share of small businesses on Gusto are hiring for AI roles – and that the pace has accelerated rapidly in the past two years. In this analysis, we look at the share of employees on small business payrolls with “AI” job titles. And we examine how AI hiring has shifted since 2019, and which industries and cities in America are leading the pack on AI hiring among small businesses.View the full analysis here.

In this episode of "The Insights Brief" from Gusto, we summarize the key takeaways from our recent research, "Beyond the Books: How Accountants Can Help Small Businesses Thrive." Download the full study at: https://gusto.com/resources/gusto-insights/beyond-the-books

America’s healthcare system is mostly based on employer-provided health insurance. Because roughly 46% of Americans work at small businesses, the ability of small companies to affordably offer health benefits to their employees is a critical national priority.  Based on our analysis of real-time payroll and benefits data from Gusto, we find that since 2022 the cost of offering health insurance has risen sharply for small businesses, far outpacing inflation. Additionally, health insurance premiums are expected to rise sharply in 2026, and many employers are bracing for the largest increases in costs in more than 15 years. This episode walks through our latest research report from Gusto Insights: https://gusto.com/resources/gusto-insights/smbs-continue-to-offer-health-insurance

Accountants have long been trusted partners to small businesses, but that partnership is changing. Today’s clients want more than bookkeeping support or tax preparation. They’re looking for guidance on compensation, growth, and how to navigate uncertainty.This report draws on survey responses from more than 1,200 small business leaders who currently work with an accountant. It highlights how clients choose their providers, which services they value most, and where they’re willing to pay for more support.The findings offer a clear message: small businesses are asking for more. Accountants who recognize this shift have an opportunity to grow their impact in the businesses they serve.

Summary of our annual State of Small Business 2025 report. Drawing on responses from a nationally representative survey of 1,148 small businesses, we reveal what America’s small business owners think about the state of the economy, their views on tariffs and interest rates, and their expectations for hiring and business performance in the coming year.

October 2025 marks the inaugural release of the Gusto Small Business Jobs Report – a real-time view of hiring among the 400,000+ U.S. small businesses on Gusto. This podcast breaks down the state of hiring among U.S. small businesses, as seen in anonymized Gusto payroll data.