2017: Year of the Middle Market?

Earlier this year, new research compiled by American Express and Dun & Bradstreet looked specifically at the middle market, and its collective impact on the U.S. economy. While definitions vary on what constitutes a “mid-market” company (in this case, anything between $10MM - $1B), what is consistent is the fact this segment is a major driver of jobs and revenue. Some figures from the Middle Market Power Index:

  • The mid-market employs nearly 53 million workers in the U.S., more than double its numbers just five years ago (2011), leading national job growth for that period.

  • Mid-market companies contribute $9.3 trillion to the U.S. economy.

  • Middle market firms drive just over one of every four dollars generated in the economy, and comparatively, more than one in every four employees.

  • States with a higher concentration of middle market companies include the Rust Belt states of Michigan, Ohio, Wisconsin, Indiana and Illinois, as well as the east coast population centers of New York and Massachusetts.

While we’ve recently discussed what impact the mid-market has on trade finance, a broader question is what impact they have on the U.S. economy. Many private, family-run companies fall under the mid-market label, as do many suppliers to the Fortune 1000, which themselves are clustered in more traditional population centers such as New York, San Francisco, Chicago, Houston, etc. Evidence of the latter can be found by looking at industry vertical data; 18% of middle market firms can be found in the manufacturing segment, while that vertical represents just 3% of firms overall. Geographically speaking, for areas with a dearth of Fortune 1000 organizations, middle market companies often fill the void in offering consistent, stable employment that can have a significant impact on a local economy and future job prospects for its residents. 

Looking ahead to 2017, how might the mid-market continue its rapid pace of growth? The Power Index survey reports there are roughly one million firms that generate between $1 - $9.9MM in annual revenues, representing the next group of companies to “graduate” to the mid-market. It is worth noting that 16% of this group is made up of women and minority-owned firms, helping to drive ownership diversity in the overall economy. Furthermore, a collective 60% of all middle market firms can be found in either manufacturing, wholesale trade, retail trade, educational services, and health services. While manufacturing growth can often be tied to macroeconomic factors affecting the broader economy, the latter four segments in particular represent areas with much growth potential. In any event, regardless of what 2017 may hold, getting working capital to this critical segment of the economy remains our mission.