While many business and economic conversations often focus on large corporations or small companies, new data shows that U.S. middle market firms—those that generate between $10 million and $1 billion in annual revenue—are punching above their weight in terms of economic contributions. The latest Middle Market Power Index from American Express and Dun & Bradstreet finds that this often overlooked segment of businesses bring significant value across the board. While middle market firms account for less than 1% of all U.S. companies, they contribute one in four dollars (27%) and employ a quarter of American private sector workers (27%). Currently, the 179,782 companies that make up the middle market generate a combined $9.3 trillion and employ 52.7 million workers across the country.
Equally impressive is their growth in the years post-recession. Between 2011 and 2017, the overall number of all commercially-active firms declined; however, the number of middle market firms nearly doubled, as did their revenues. In fact, more than half (51.7%) of the 51.8 million net new jobs created since 2011 have come from middle market enterprises.
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What types of companies fall into this category? Nearly one-third of all middle market companies are in either the manufacturing (17.6%) or wholesale trade industries (16.6%), and both of these categories have fueled growth in the U.S. over the past six years, growing at least 120%. Other strong industries for middle market firms include business services (11.3%), retail (11.1%) and construction (8.7%).
Geographically speaking, there are seven states with a greater than average share of middle market firms compared to the rest: Illinois (1.55%), Wisconsin (1.53), Michigan (1.36%), Ohio (1.29%), North Dakota (1.28%), New Jersey (1.28%) and Kansas (1.26%)—along with Washington D.C. (2.13%).
Looking at growth in number of these companies, Texas has experienced the largest surge in number of middle market firms over the past six years, up 104%. Currently, Texas is home to 14,226 middle market enterprises, which account for roughly .93% of all businesses in the state.
While growth strategies for middle market firms vary, exporting is becoming increasingly popular within the sector. The number of middle market firms that are selling goods and services internationally has quadrupled over the past six years, from roughly 2,700 companies to more than 12,300 in 2017. Currently, 6.9% of all middle market firms are exporting.
While overall, middle market firms make up a small number of U.S. companies, they play a vital role in the economic health of the country—creating jobs, generating revenue and adapting to stay competitive in a global market. This booming segment of businesses is certainly one to watch.
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