Photo of small business owner looking to increase staff.

Well-Being Index: Small-business hiring and employee retirements both on the rise

December 2021

Businesses—especially small businesses—are hiring more workers compared to a year ago.

The Principal Financial Well-Being IndexSM in November 2020 saw only 19% of small businesses (those with fewer than 500 employees) reporting that they had increased their staff in the previous three months. That compared to 55% of large businesses.

Our latest survey shows that small-business hiring has surged to 42%, more than double the increase among large businesses, now at 65%.

Thumbnail of the Well-Being index results.

See charts and insights from the latest Principal Financial Well-Being IndexSM.

In October, we surveyed 500 business leaders from companies with two to 10,000 employees. The Well-Being Index spans a diverse array of industries, with more than half of the employers falling within finance/insurance, professional/scientific/technical, construction, manufacturing, and information management.

This is the eighth year of our Well-Being Index and the second year since we expanded it to multiple waves throughout the year to help businesses navigate a more volatile and complex economy.

While small businesses have gained ground in their relative rate of hiring, they also disproportionately cope with a higher rate of churn: The share of employees leaving a company voluntarily is 67% among small businesses compared to 61% for large.

“Employers are trying to stay fully staffed as employees leave at a higher rate—maybe even faster than they’re replaced,” says Mark West, national vice president of business solutions for Principal.

Retirement now is No. 1 among reasons employees are voluntarily leaving their jobs—even ahead of caregiving responsibilities challenged by the pandemic:

  1. Retirement
  2. Additional caregiving responsibilities due to COVID-19
  3. Changing career path
  4. Geographic relocation

West wonders whether some among this latest wave of retirees may gradually reenter the workforce in part-time roles or even launch their own business.

“My belief is that ‘retirement’ and ‘changing career path’ will end up somewhat commingled when the financial reality of a premature retirement sets in,” he says.

Next steps

  • Visit principal.com/businesses to find more resources to help your business grow.
  • Are you a business with fewer than 100 employees? Try our Principal Benefit Design Tool to see how your employee benefits compare to those of your peers. Stay competitive and attract and retain with confidence.

©2021 Principal Financial Services, Inc. Insurance products issued by Principal National Life Insurance Co (except in NY) and Principal Life Insurance Co. Plan administrative services offered by Principal Life. Principal Funds, Inc. is distributed by Principal Funds Distributor, Inc. Securities offered through Principal Securities, Inc., member SIPC and/or independent broker/dealers. Referenced companies are members of the Principal Financial Group®, Des Moines, IA 50392.