Retirement and Financial

30+ PEO Statistics for HR teams in 2023

In the U.S., several professional employer organizations (PEOs) provide payroll, benefits, and other HR services to hundreds of thousands of mainly small and mid-sized businesses employing 4 million people. PEOs assist organizations in increasing productivity and profitability. The following are the most recent PEO statistics: 

  • PEOs serve 173,000 small and medium-sized companies that employ 4 million people. (Napeo, 2021) 
  • In 2020, companies paid $216 billion to 4 million worksite employees. (Napeo, 2021) 
  • The overall number of employees represented by the PEO industry is about the same as the total number of employees represented by Walmart (the United States only), Amazon, Kroger, and Home Depot combined. (Napeo, 2021) 
  • The 173,000 clients of the PEO industry account for 15.3% of all firms with 10 to 99 workers. (Napeo, 2021) 
  • The number of WSEs working in the PEO sector increased at a compound annual rate of 7.6% between 2008 and 2020. This is 7% greater than the economy’s total compounded yearly growth rate for the same period. (Napeo, 2021)  
  • PEO market projects exponential growth from 2021 to 2025, which indicates that the PEO industry has a profitable long-term outlook. (Anythingresearch, 2021) 
  • PEOs’ 3.7 million worksite employees earned a total of $176 billion in 2019. (Napeo, 2019)  
  • The size range of typical PEO customers is from 10 to 99 employees. (Napeo, 2019) 
  • PEO employees account for 15% of all employment by private sector firms, with 10 to 99 workers and 2.4% of civilian jobs in the United States. (Napeo, 2019) 
  • The number of worksite personnel working in the PEO business increased at a compound annual rate of 8.3 % between 2008 and 2017. This is about 14 times the compounded annual growth rate of employment in the economy during the same period. (Napeo, 2019) 
  • Over the last 15 years, employment at SMBs who use PEOs has risen between 7% and 9% faster than small to midsize enterprises overall. (Genesis HR, 2021) 
  • PEOs help small businesses develop 7 to 9% faster and are 50% less likely to fail. (Genesis HR, 2021) 
  • In the U.S., there are between 708 and 980 PEO’s currently operating and providing services. (Napeo, 2021) 
  • PEO’s are providing services to between 156,000 and 180,000 small and midsize businesses. (Napeo, 2021) 
  •  According to economist Laurie Bassi’s research, firms that utilize a PEO have 40% better revenue growth, 14-16% lower turnover rates, and are 50% less likely to go out of business than enterprises that do not employ a PEO. (Napeo, 2021) 
  • In 2022, the federal government spent $10,081,570 on PEOs. (AnythingResearch, 2023) 
  • It awarded 38 contracts to 27 companies. The average value per company was $373,391. (AnythingResearch, 2023) 
  • Nearly two-thirds of PEO clients have 20-49 employees (37% of all clients), or 10-19 employees (28%). Only 1% have 500-4999 workers. (Napeo, 2022) 
  • Almost half of PEO clients are represented across three industries: professional, scientific, and technical services (22%), manufacturing (13%), and construction (12%). (Napeo, 2022) 
  • More than half of all PEO clients are located in Florida (25%), Texas (13%), California (11%), and New York (10%). (Napeo, 2022)  
  • Small and medium-size PEOs are likelier to have a higher percentage of smaller clients. (Napeo, 2022) 
  • Approximately one-quarter of all clients of the 30 largest PEOs operate in the professional, scientific, and technical services industry. (Napeo, 2022) 
  • The estimated penetration rate for the PEO industry among US organizations is about 3%. (Napeo, 2022) 
  • The penetration rate is highest among companies with 20-49 employees at 16%. (Napeo, 2022) 
  • Across industries, the rate is highest in real estate/rental/leasing a 31% and in professional, scientific, and technical services at 28%. (Napeo, 2022) 
  • Awareness of PEOs has increased by 48% since 2018. (PRNewswire, 2023) 
  • The awareness among business decision-makers rose to 65% in 2022. (PRNewswire, 2023) 
  • More than 15% of employers with 10-99 employees collaborate with a PEO. (PRNewswire, 2023) 
  • 33% of decision-makers said they used a PEO in 2022. (PRNewswire, 2023) 
  • Young decision makers between 25 and 34 years old are the strongest respective base of PEO users at 42%. (PRNewswire, 2023) 
  • 40% of companies operating for less than ten years use a PEO. (PRNewswire, 2023) 
  • 81% of those who don’t use a PEO are interested in using one in the future. (PRNewswire, 2023) 

Conclusion

These latest PEO statistics show how they provide considerable benefits, particularly for a small company that may lack the depth of HR knowledge or system capabilities 

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— Written by the <br>Shortlister Editorial Team

— Written by the
Shortlister Editorial Team

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