# Opinion: Smaller companies aren’t necessarily being hurt more than larger ones because of the pandemic

To get an early vantage point on this question, I recently obtained the most recent 10-K filings for 253 publicly traded companies (with fiscal year-ends after June 30) to study how their employment numbers have changed from the year before.

The data show — perhaps surprisingly — that smaller companies are not necessarily being hurt more than larger companies. In fact, smaller public companies, defined as those with staffs ranging from 100 to 1,000, grew employment on average by 3.3%. Only 36% of small companies reduced their workforce; the remaining 64% increased it. These companies also boosted annual revenue, on average, by 4.6%.

A larger fraction of medium-sized and large companies reduced their workforce. In particular, 53% of medium-sized companies, defined as those with a workforce from 1,000 to 10,000, reduced their staff. On average, medium-sized companies cut their workforce by 2.2%.

Among large companies with more than 10,000 employees, 43% reduced their workforce. But large firms on average grew their workforce by 3.1%, in line with small firms.

The median small company increased employment more, compared with the median large company — 3.6% vs. 2.1%.

There is large heterogeneity within each group, with winners and losers among the smallest and largest companies. It appears that it isn’t the size of the company, but rather the nature of business, that determines how companies treat their workers during this pandemic, and whether they contract or expand.

Among large companies, food distributor Sysco Corp.
SYY,
-5.38%,
for example, reduced the number of its employees to 57,000 from 69,000, and Regis Corp.
RGS,
-1.91%
to 9,000 from 20,000. Regis’s revenue dropped 37.4% because of salon closures. Software giant Microsoft Corp.
MSFT,
-3.94%,
on the other hand, increased its staff to 163,000 from 144,000. Of these, 11,000 are new additions to the workforce in the U.S.

Among medium-size companies, Madison Square Garden Sports Corp.
MSGS,
-1.88%,
which manages the Knicks and the Rangers, lowered its full-time staff to 420 in August from 2,900 as of June 30, 2019, while it decreased its part-time staff to 430 from 10,100. The company’s total employment dropped by more than 90% and revenue tumbled by 63%.

A sister company, Madison Square Garden Entertainment Corp.
MSGE,
-0.48%,
which operates and manages events at Madison Square Garden, among other venues, shrank to 7,600 from 13,000 as its revenue dropped 27.3%. In contrast, Peloton Interactive Inc.
PTON,
+0.85%,
the maker of indoor-cycling equipment, increased its workforce to 3,700 from 2,000 while almost doubling its sales.

Among small companies, there are winners and losers as well. Flux Power Holdings Inc. FLUX, a developer of lithium-ion batteries for forklifts, increased its staff to 103 from 75 as revenue grew 81%. Rave Restaurant Group Inc.
RAVE,
+1.67%,
which operates Pie Five and Pizza Inn restaurants, reduced its staff to 22 from 45.

Overall, it is clear that the COVID-19 crisis started off a significant redistribution of the workforce among companies in the U.S. As more data on public companies become available, we will have an opportunity to take a deeper dive into forces that shape this redistribution.

The good news so far is that smaller public companies are in a good shape — in fact, better than larger ones. Most of them are younger, nimbler and can adapt to changes faster. That’s comforting because in the long run small companies have been shown to create the vast majority of jobs.

Egor Matveyev is a senior lecturer at the MIT Sloan School of Management.