“Medium-sized firms are the unsung heroes of America’s economy”

By Eunice Chang

AP ECONOMICS and the rest of this world, Hello!   

I will give some background information on my article, because that is the most boring part. Please persevere through it. It shouldn’t be too painful, especially because we all love econ. The article “Medium-sized firms are the unsung heroes of America’s economy” talks about how medium sized firms in particular have been a safe route in our economy. Although 97% of large businesses have survived the “dark years” of 2007-2010, their rate of unemployment is extremely disappointing and frightening. With 3.7 million jobs lost during those years, the economy took a toll through these big businesses. That means 3.7 million people are now unemployed and in search for work. On the contrary, only 57% of small businesses survived during these darks years. However, the hope is through the medium sized firms. Approximately 82% of these firms survived during the “dark years”. Not only did they survive, but they also added 2.2 million jobs. This is a new trend in our economy. In 2010 – 2011, the employment in medium sized firms increased 3.8%. In comparison with these particular firms, there was only a 2.5% increase in employment through small businesses, and an exceptionally low 0.8% between all of the big businesses. 

Because we love visuals, this graph basically summarizes the description above. As you can see, it is evident that only the employment in middle sized firms consistently increased (in accordance with the economic circumstances), while the rest consistently decreased.

Now for Eunice’s thoughts, here we go! In terms with the health of our economy, it is safe to say that middle sized firms and industries have helped us regain strength. To my surprise, the attention was always on the large and small businesses. I never really thought about what was in the middle, and although we did have a recession, the middle-sized businesses were still holding on (obviously they struggled too, however). It is just funny how I overlooked it that much, and focused only the downfalls of our economy. Although our economy went through a “falling out” because of the recession, some good things came out of it too. Now that I think about it, it seems that middle-sized businesses are all around better for the following reasons…

1. In big businesses there are so many people that no one really cares about you. You could be replaced with a blink of an eye, unless if your “human capital” is absolutely, positively, supurb/outstanding.
2. In small businesses you generally have more responsibility, and everyone will most likely know you. Also it is more risky, because there isn’t as much money invested with small companies. You could lose your job just as easily if something goes wrong. There is just a lot of RISK, and that is not comforting.

It’s like The Three Bears. It’s either “too hot” or “too cold”, “too much” or “too little”. However with middle sized businesses, it is just right. 

I bet you didn’t know this.

Some Fun Facts about Middle Sized Firms:

1. Mid-sized firms tend to bear the heaviest burden with New Regulations

·         This is because smaller firms often times are given some exemptions, while bigger firms have legions of lawyers to cope with the additional rules.

2. Mid-sized firms tend to be privately owned

·         31% by a family, 40% by some combinations of private equity, the rest fall in the “other” category

3. Only 14% of all mid-sized firms are traded in the stock market

·         The reason why is because freedom from short-term stock market pressures is one reason why these middle firms have to be more willing to invest for the long term despite the tough condition of economy

Dictionary:

Most AP Econ students will know the definitions of these words, however if you are a internet wanderer here are some new words (word) for you. 

Human Capital (Noun): The collective skills, knowledge, or other intangible assets of individuals that can be used to create economic value for the individuals, their employers, or their community: education is an investment in capital that pays off in terms of high productivity.

Definition Provided From: http://dictionary.reference.com/browse/human+capital

If you would like to learn more about Human Capital in an interesting manner, please read chapter 8 in Naked Economics by Charles Wheelan. We read it in our AP Econ class and it was actually interesting. 

HORRRRRRRRRRRRAY!

Have a lovely day, folks.