The Economic Divide Between Big and Small Companies Is Growing

While America's largest corporations are riding a wave of surging profits and AI-fueled stock market enthusiasm to record highs, small businesses across the country are cutting staff and scaling back operations as years of high inflation, cautious consumers and tariff confusion take their toll.

Private firms with fewer than 50 workers have steadily shed jobs over the past six months, according to payroll processor ADP, cutting 120,000 positions in November alone. Midsize and large firms continued adding jobs during the same period. The divergence mirrors what's happening among American consumers.

The Federal Reserve's latest beige book noted that overall consumer spending declined further even as higher-end retail spending remained resilient. Workers at small businesses tend to earn less than those at large companies, and stock market gains from large public company shares flow mostly to wealthier Americans. Small businesses -- those with up to 500 workers -- employ nearly half the American workforce and represent more than 40% of GDP, according to the U.S. Chamber of Commerce. But their profits are slightly lower than a year ago, per a Bank of America Institute analysis. Net income at S&P 500 companies rose 12.9% from a year earlier in the third quarter.

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