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Almost two-thirds of all PEO clients have between 10 and 49 employees. Almost half of all PEO clients are in Professional Services, Manufacturing, or Construction. Small- and medium sized PEOs tend to have a smaller average client size than larger PEOs.

This white paper explores the effect that PEOs have had on business outcomes for their clients over the course of the pandemic to date, building on findings in the 2020 NAPEO white paper that undertook a short-term analysis of PEO impacts during the initial months of the pandemic.

As awareness of PEOs increases, the industry as a whole continues to grow. This paper provides new measures of the size, scope, and footprint of the PEO industry as of the end of calendar year 2020.

The 2020 COVID-19 pandemic has created unprecedented economic challenges for almost all employers, with small businesses hit especially hard. This white paper examines the available evidence on the early impact that PEOs had on business outcomes for their clients.

The areas where PEOs can deliver significant value to their clients can be divided into three broad categories: improving client's ability to attract, motivate, and retain employees; enabling clients to focus on their core businesses while PEOs handle all HR matters; and lowering HR-related expenditures.

PEOs produce benefits for their clients by providing them with a broad array of cost-effective HR offerings. As a result, PEO clients are able to provide their employees with a better value proposition, and employees respond in kind by helping their employers grow their businesses.

This report, highlighting the effects that partnering with professional employer organizations (PEOs) has on small and mid-sized businesses and their employees, is the fifth in NAPEO’s series of white papers designed to help the general public and the small and mid-sized business community better understand the economic impact and value of the PEO industry.

Healthcare, taxes, and regulation - exactly the issues that PEOs help clients address - are consistently reported as the top concerns of small businesses.

Anecdotally, evidence points to a growing PEO industry driven by a rebounding small business sector, an increase in the use of outsourcing by small businesses, and the rise of complicated employment regulations such as the Affordable Care Act (ACA).