120,000 Jobs Cut by Small US Companies Raise Alarms

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ADP released its monthly Employment Report, and the numbers are shocking. Small businesses in the US cut 120,000 jobs in November 2025.

This parallels the trend in the entire private sector’s job, since the overall private sector shed 32,000 jobs during the same month. That means the drop was driven almost entirely by small firms.

The ADP Employment Report is one of the first major signals we get each month about what’s happening in the U.S. job market.

Why Are Small Businesses Struggling in the US?

When you walk down your local street and see family-owned shops, your neighborhood pizza place, or that small auto repair shop, you are looking at the backbone of America’s economy. But these mom-and-pop businesses are facing some serious trouble right now.

While small businesses were cutting thousands of jobs, larger companies actually added about 90,000 workers. 

Here is the exact breakdown of employment status:

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• 1-19 employees: -46,000
• 20-49 employees: -74,000
• 50-249 employees: +31,000
• 250-499 employees: +20,000
• 500+ employees: +39,000

Comparing this to October’s numbers, where there was job growth of 42,000, the small businesses still lost 10,000 jobs. Even in September, they laid off 40,000 people. Small firms had reduced headcount in 6 out of the last 7 months.

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This is happening because small businesses have fewer financial reserves to fall back on when times get tough. They don’t have the same resources as corporations to handle rising costs from things like tariffs, higher utility bills, and increased expenses.

Dr. Nela Richardson, chief economist at ADP, explained this on CNBC:

“This is really a small-firm story, more specifically, a mom-and-pop story. The job losses came from businesses with fewer than 50 employees, and when you map that to the broader economy, it aligns with industries like construction, where small firms dominate. Think about the mindset of a small business owner: they rarely announce a formal 10% workforce cut. Instead, they simply choose not to replace a retiring employee, allow natural attrition to reduce headcount, pause hiring, or skip bringing on a few seasonal workers during the holidays.” 

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This creates what economists call a “two-track economy”. It is a situation where different parts of the economy are moving in opposite directions: one group is doing well while another is struggling. It creates an imbalance within the same economy, which may widen the income inequality.

Note that companies have announced 1,170,821 job cuts in 2025 through November.

Which Industries Are Struggling?

The job cuts weren’t limited to one type of business. The losses spread across multiple industries:

• Professional and business services took the biggest hit, losing 26,000 jobs
• Information services (think tech companies, publishers, and telecommunications) cut 20,000 positions
• Manufacturing shed 18,000 jobs
• Construction and financial services each lost 9,000 jobs

Only a few bright spots emerged. Education and health services actually added 33,000 jobs, and the hospitality industry (restaurants, hotels, entertainment venues) hired 13,000 workers. 

Even going by, the pay growth is lower in small companies. According to the ADP report, among small businesses, pay growth remains modest at 2.5% for employees at firms with 1–19 workers, while it is 4.0% at firms with 20 to 49 employees. 

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This is lower compared to mid-sized and large companies, where wage growth is at least above 4.7%.

Bottom Line

So what’s causing all this? Economists are saying caution among consumers is the key reason behind such major job losses. Regular people (especially those with lower and middle incomes) are being more careful about how they spend their money.

This matters because when consumers stop spending, businesses that depend on that spending have to make tough choices. Small businesses operate on thin profit margins, so when sales drop even a little, they often have no choice but to cut workers to survive.

The loss of 120,000 small business jobs in November represents real families facing real challenges. It highlights a growing divide between America’s biggest corporations, which continue to hire and grow, and the small businesses struggling to survive in an uncertain economy.