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Small Businesses Layoff Fewer in May, Hiring Slows Down

TriNet’s Human Capital Index delivers employment outlook insights on small, growth-oriented businesses.

SAN LEANDRO, Calif. (June 1, 2010) – Small, high-wage companies continued a six-month trend of slower hiring, while layoffs in these companies also continued to decline, according to TriNet’s Human Capital Index (HCI), a monthly report that provides direct visibility into the employment practices of thousands of small technology, professional services and financial services companies driving innovation and growth in the U.S. economy.

TriNet, the country’s second-largest provider of human resources outsourcing solutions to small businesses, developed the Human Capital Index with real-time data from 3,000 companies ranging from 10-200 employees earning an average annual salary of $75,000.

“Despite new incentives like the HIRE Act, small, high-wage companies are not adding new employees as rapidly as they were late in 2009,” said John J. Midgley, TriNet’s vice president of products. “Although we saw an upturn in April, the six-month trend through May clearly shows hiring activity well below the highs set during the fourth quarter. While hiring has slowed, layoffs have also continued to slow, suggesting that small employers have trimmed their workforces to reflect current market conditions and are now in a period of stability.

“Hiring a new full-time employee in these companies represents a big bet, because average employee compensation is well above the broader U.S. average,” Midgley continued. “The companies we study continue to hire at a slower pace than broader U.S. averages. U.S. private-sector service employment has trended up slightly since last fall, while small, high-wage company employment growth continues to stall.”

Small Companies Limit New Hiring

Small, high-wage companies have shown reluctance to add new full-time employees in 2010. Compared to fall 2009, when early signs of economic recovery produced some employment growth, 2010 has seen slower hiring. The TriNet Hiring Index was at 88 in May, well below its high reading of 105 last November. Values below 100 indicate a slower rate of hiring compared to the base month of September 2009.

Hiring slides in May

Layoffs Decrease

While hiring slows, the pace of layoffs in small high-wage companies is below last year’s levels, and continues to decline. Taken together, slower hiring and fewer layoffs suggest that management teams have rightsized their companies for expected market conditions. TriNet’s Layoff Index stood at 80 in May, continuing a general downward trend since last fall.

Fewer employees laid off in May

About the Human Capital Index (HCI)

The TriNet Human Capital Index draws on real-time employment information from about 3,000 small companies who employ between 10 - 200 employees. These companies fall primarily into three broad industry segments: technology, professional services and financial services. The HCI aggregates and reports data reflecting hiring and involuntary terminations not related to performance (layoffs). The HCI is reported monthly, using current payroll and HR data compiled as of the 24th of each month. Additional details can be found on the company’s HCI web page.

About TriNet

TriNet serves as a trusted HR partner to small businesses, to help contain costs, minimize employer-related risks, relieve administrative burden, and keep focus on core business functions. From routine employee benefits service and payroll processing to high-level human capital consulting, TriNet's PEO expertise is integrated with every facet of a client’s organization. Its solutions specialize in serving fast-moving companies in fields such as technology and professional services, who recognize that top-quality employees are the most critical competitive asset. For more information, please visit https://www.trinet.com.

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