Job Growth in Franchising Slows in 2018, ADP Report Says
Ahu Yildirmaz is co-head of the ADP Research Institute, which tracks job numbers overall and in franchising, among many other segments.
The franchise sector added nearly 140,000 jobs in 2018 for a growth rate of 1.82 percent, according to a new study by the ADP Research Institute. That was down from the year before, when 212,000 franchise jobs were added for a growth rate of 2.74 percent.
The rate of franchise job growth in 2018 nearly matched the overall growth rate in U.S. jobs, which was 1.97 percent.
The top-performing industries for franchise job growth were restaurants, auto parts & dealers, personal services and business services, ADP reported. Restaurants added nearly 80 percent of all franchise jobs in 2018, up from 2017 when restaurants added about 70 percent of all franchise jobs.
An arm of payroll service ADP, ADP Research Institute uses transactional payroll data from one in six U.S. workers to create its reports.
“We’ve been tracking this for franchises almost five or six years,” said Ahu Yildirmaz, co-head of the ADP Research Institute. “This is a very special time in the U.S. labor market. Every month on average we are pumping 200,000 jobs” into the economy, “and it’s been a tight labor market. It is the highest, actually, from a job opening perspective, the rate of openings is growing much faster than the hiring. There is a skilled worker shortage, and it’s a real tight market.”
The biggest gap is in the skilled worker side. “When I say skilled workers, I’m not only talking about the high-tech corridors. I’m talking about hair cutters or construction workers or any skill that an employer needs to run businesses. Haircuts for franchises are a good example,” she said.
She pointed to 2018 as the first year that ADP has done the survey in which franchise job growth, at 1.82 percent, did not outpace overall job growth, at 1.97 percent. “The slowdown is strange, because the overall market is doing really well,” she said.
“I think there’s a reason: From a franchise perspective, most of the job creation is coming from the large companies, and one of the arguments is because the market is very tight” large employers can attract more workers. “They offer more, and small businesses are struggling more because they don’t have that much to offer in terms of wage growth and other benefits.”