The overall opportunity for PEOs is $56B (source: JP Morgan) which represents 21.5 million SMBs with 10-99 employees. However, in the US, workers are increasingly working for larger enterprise companies and those enterprises have the resources for in-house employment.
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US Workers Are Increasingly Working for Larger Enterprise Companies
The percentage of employees working for enterprise companies (500+ employees) has increased as a percentage of the workforce compared to SMBs. From 2007 to 2017, the percentage of the workforce employed by enterprises increased 1.9%.
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Peos Offer Better Healthcare for Small Businesses
One of the benefits of a PEO for small businesses in the U.S. is access to better healthcare plans. Since the PEO is an employer of record, they have many employees which improves their buying power when negotiating plans. A small business on their own does not have many employees to negotiate better rates.