Mid-size American companies grew their revenues five times faster than their much larger counterparts in the S&P 500 and posted a five percent revenue growth in 2013, according to the latest survey of the business segment. They also blew past both smaller and larger companies in hiring, creating 1.2 million jobs last year, and plan to add another million in 2014. But healthcare costs remain the most challenging issue. They have been the top concern for more than a year.
The numbers come from a quarterly survey called the Middle Market Indicator (MMI). The survey polls 1,000 top executives from the roughly 200,000 U.S. businesses with annual sales between $10 million and $1 billion that make up the middle market.
The middle market is an important economic bellwether. Although it represents just 3 percent of American companies, the segment employs a third of all U.S. workers.
Despite the growth, almost 60 percent of middle market executives say that federal government regulations and uncertainty, such as the Affordable Care Act rollout, had negative effect on their business planning in 2013. The MMI found that 63 percent of mid-size businesses have discouraged hiring and 56 percent reported lower likelihood for capital investments. “The growth we’ve experienced this year has occurred in spite of Washington, not because of it,” says Rick Cope, CEO of NanoLumens, a manufacturer of large LED displays and digital signage based in Atlanta, GA.
A new analysis from the Congressional Budget Office released on Tuesday said that the new healthcare law would result in the equivalent of 2.5 million fewer full-time workers by 2024. The key reason was people getting health insurance through the Affordable Care Act and working fewer hours.
Middle market companies anticipate revenues to increase by 4.3 percent over the next year, mainly due to slower retail growth. That’s below the 5.0 percent growth reported in 2013, but still above broader market projections.
The MMI is published by the National Center for the Middle Market. The Center was founded as a partnership between Ohio State University’s Fisher College of Business and GE Capital in 2011. Along with producing the quarterly MMI reports, the Center also promotes academic research in areas such as globalization and innovation.
Photo credit: André Zehetbauer