Alexandria, VA, October 17, 2025 — The National Association of Professional Employer Organizations (NAPEO) today released comprehensive data on the demographics of businesses using professional employer organizations (PEOs). The data shows continued growth and diversification among PEO clients, particularly among the small and mid-sized business that are the backbone of the U.S. economy.
According to the research, more than 230,000 U.S. businesses currently partner with a PEO — representing about 15 percent of all employers with 10 to 499 employees. PEO clients are in every state, with the highest concentrations in Florida (18%), California (16%), New York (9%) and Texas (8%). PEO clients are represented in almost every major industry group, with the largest share operating in Professional, Scientific and Technical Services followed closely by Healthcare and Social Assistance, Construction, and Manufacturing.
“Since our last study in 2022, PEOs continue to expand their impact with businesses of all sizes,” said NAPEO President & CEO Casey Clark. “Smaller businesses are engaging PEOs at a higher rate, and PEOs are scaling with companies they help to grow. Overall, more American workers are benefiting from a PEO relationship than ever before.”
The research, conducted by economists Laurie Bassi and Dan McMurrer, used a client database that was 10 times larger than the one used in 2022, allowing for more detailed, more accurate estimates (including breakdowns by state and Congressional district.
“This data reinforces what we’ve long known—PEOs are growth engines and vital partners for American businesses,” said Clark. “Across all industries, PEOs help businesses provide comprehensive benefits for their employees, stay compliant with state and federal regulation, and focus on growth and success.”
The report is available at napeo.org/peoclients.
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About NAPEO
The National Association of Professional Employer Organizations (NAPEO) is The Voice of the PEO IndustryTM. NAPEO’s 187 PEO members provide payroll, benefits, workers’ comp, regulatory compliance assistance and other HR services to more than 230,000 small and mid-size businesses employing more than 4.5 million people. Our members generate more than $372 billion in revenue. An additional 207 companies that provide services to PEOs are associate members of NAPEO. For more information, please visit www.napeo.org.