A Closer Look at the Recession’s Outsize Impact on Small Business

According to the adage, economists prove that what works in practice works in theory. They also sometimes confirm what pretty much everyone feels in their gut.

One of those feelings is that the Great Recession had a disproportionate impact on small firms. It turns out the facts support this belief.

In a thorough study released last month on the recent downturn’s impact on firms of different sizes, Fed researcher Michael Siemer showed that employment at small firms (those with 50 workers or fewer) dropped by roughly 5% to 10% more than in firms with 500 or more workers.