We’ve heard a lot about the disappearing middle class – the notion that the territory between the rich and the working poor is shrinking thanks to job loss, the escalating cost of living and stagnating incomes. Though the middle-class is often romanticized, especially in political speeches, as the backbone of the country, statistics show that the stable job, suburban house, two-car garage and nice pension mostly expected a generation ago is now the envy of many.
So today comes news that the middle ground is disappearing on a corporate scale, too.
According to the Business Development Bank of Canada, 1,556 mid-sized companies (defined as 100 to 499 employees) disappeared between 2006 and 2010. That’s a 17 per cent drop (9.370 to 7,814) in just four years. Pretty alarming numbers.
What’s worse is that Ontario took the biggest hit, losing a quarter of mid-sized businesses (3,810 to 2,861).
It will be no surprise to many in Hamilton that the worst hit sector was manufacturing. More than half the sector’s mid-sized firms vanished between 2001 and 2010 from 2,807 to 1,381.
That study found that 14 per cent of mid-sized firms became small firms (below 100 employees) or closed down each year from 2006 to 2010. Only 1.4 per cent grew to become corporations with 500 or more employees.
The situation is even more troubling when you consider the economic impact of mid-sized companies. BDC said while mid-sized firms represent just one per cent of the total number of companies, they account for 16 per cent of Canadian jobs, 12 per cent of GDP and 17 per cent of exports.
What this all clearly indicates is that while focusing on startups is important, it is even more vital that government, business organizations and the finance sector provide the necessary supports and environment to help small and medium-sized companies flourish. The study found that mid-sized businesses cited access to financing as the most important barrier to growth.
That has got to change or the next few years will see only more shuttered companies, lost jobs and an ever- smaller middle ground.