Latest PEO Pulse Survey Shows PEO Industry Thriving After Pandemic

Nearly All Respondents Experienced Growth in Last 12 Months

A new survey by the National Association of Professional Employer Organizations (NAPEO) shows the PEO industry thriving after the COVID-19 pandemic. Industry executives also expect that this pattern will continue over the next year, with 95% reporting a likely increase in the number of worksite employees.

The quarterly survey, conducted in October 2021 by Industry Insights, also showed that PEO revenues, gross profits, and the number of clients increased in the third quarter of 2021, compared to the third quarter of 2020. PEOs provide payroll, benefits, workers’ comp, regulatory compliance assistance, and other HR services to more than 173,000 small and mid-size businesses employing 4 million people.

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“These results show that the PEO industry survived the pandemic and is thriving today,” said NAPEO President & CEO Pat Cleary. “PEOs were the unsung heroes of the pandemic as they proved to be lifesavers for so many of their small business clients. Small businesses across the country recognize the true value of partnering with a PEO and more and more are deciding to partner with a PEO.”

Since the pandemic, compared to other small businesses, PEO clients are 58% less likely to have permanently closed, are 82% more likely to have business operations back to normal or better, and have a rate of employment growth that is 81% higher.

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A total of 41 PEO executives responded to the PEO Pulse survey. The typical responding PEO has 19 worksite employees per client. Survey respondents indicated the following:

• 3^rd quarter revenue increased somewhat when compared to 3^rd quarter 2020.
• The annual wage per worksite employee increased somewhat.
• The average number of worksite employees (WSEs) increased somewhat.
• Gross profit for the 3^rd quarter increased somewhat.
• Operating income for the 3^rd quarter increased somewhat.
• Number of internal employees stayed about the same.
• Number of clients increased somewhat.
• Number of workers’ comp claims reported to carriers remained about the same.

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