PEO Industry Statistics: The Data Behind Better Business Outcomes

Wondering if a PEO is worth it? The numbers tell a compelling story.

Professional Employer Organizations (PEOs) aren’t just an administrative convenience—they’re a proven competitive advantage. Here’s what the latest research shows about businesses that partner with PEOs versus those that don’t.

Businesses Using a PEO Grow 2X Faster

PEO clients experience 4.3% annual growth compared to just 1.9% growth among comparable businesses that don’t use a PEO. That’s more than double the growth rate.

Source: NAPEO 2024 White Paper (data from 15,900+ businesses, January 2023-January 2024)

16% Higher Profitability

PEO users report an average 16% increase in profitability compared to non-PEO companies of similar size.

Source: NAPEO Industry Research, 2024

27% Average ROI

The return on investment when a business uses a PEO, in cost savings alone, is 27%. Companies invest an average of $1,395 per employee annually and save approximately $1,775 per employee.

Source: NAPEO 2024 Industry Data

12% Lower Employee Turnover

PEO clients have an annual employee turnover rate of 50.4% compared to 57.6% among non-clients—that’s 12% lower turnover, even when controlling for faster growth rates.

Source: NAPEO 2024 White Paper (data from nearly 20,000 clients employing 360,000 people)

Higher Employee Satisfaction

Businesses that use a PEO report higher employee satisfaction and engagement. Employees are more likely to stay than look for a new job, thanks to access to better benefits and professional HR management.

Source: NAPEO 2024 Research

$2,500 Higher Average Annual Earnings

PEO client employees earn an average of $2,500 more annually than their counterparts at comparable companies.

Source: BestFit PEO Solutions analysis of NAPEO data, 2024

50% Less Likely to Go Out of Business

Companies using a PEO have an average one-year non-survival rate of 4.98% compared to 7.50% for non-clients. That means businesses NOT using a PEO are 50% more likely to fail annually.

Source: NAPEO 2024 White Paper (matched pairs analysis of 2,030 companies, 2020-2023)

Especially Critical for Small Businesses

The survival advantage is even stronger for the smallest businesses. Companies with fewer than 10 employees see a 4.3 percentage point improvement in survival rates when using a PEO.

Source: NAPEO 2024 White Paper

$358 Billion Industry

The PEO industry has more than quadrupled in size since 2012, with industry revenue now reaching $358 billion annually (up from the 2020 estimate of $136-$156 billion).

Source: NAPEO 2024 Industry Overview

4.5 Million Employees Served

PEOs provide services to more than 200,000 small and mid-sized businesses, employing approximately 4.5 million people—roughly the same as the combined number of employees for the four largest companies in the U.S.

Source: NAPEO 2024 Industry Overview

500+ PEOs Operating Nationwide

There are approximately 500 PEOs currently operating in the United States, employing between 21,000 and 27,000 people internally.

Source: NAPEO 2024 Industry Data

14% Market Penetration

14% of all employers with 20-499 employees currently use a PEO, and that number continues to grow as awareness increases.

Source: NAPEO 2024

Better Retirement Benefits

For businesses with 10-49 employees, 52% of PEO users have a retirement plan, versus just 23% of companies that do not use a PEO.

Source: NAPEO 2024 Research

Fortune 500-Level Benefits at Small Business Scale

PEOs give employees access to HR expertise and Fortune 500-level benefits at an affordable cost, improving employee retention and engagement—benefits that would be out of reach for most small businesses operating independently.

Source: NAPEO 2024

15X Faster Than Overall Job Market

The PEO industry has grown 15 times faster than the overall U.S. job market in recent years, reflecting rising reliance on PEOs by businesses looking to simplify operations and enhance employee satisfaction.

Source: Straits Research, Professional Employer Organization Market Report, 2024

Consistent 30-Year Growth

In each of the last 30 years, the PEO industry has added, on average, roughly 100,000 worksite employees and 6,000 net new clients. That means every five years, the PEO industry has added the employment equivalent of the entire utilities industry in the United States.

Source: NAPEO Historical Data

Who Uses PEOs?

• Almost two-thirds of all PEO clients have between 10 and 49 employees
• Almost half of all PEO clients are in Professional Services, Manufacturing, or Construction
• Small- and medium-sized PEOs tend to have a smaller average client size than larger PEOs

Source: NAPEO 2022 Industry Data

What This Means for Your Business

The data is clear: businesses that partner with PEOs don’t just survive—they thrive. They grow faster, retain employees longer, and are significantly more resilient during economic challenges.

But not all PEOs are created equal.

The key to capturing these benefits is finding the right PEO for your specific business needs—one that fits your industry, size, location, and growth goals.

That’s where PEO Consultants comes in.

We’ll help you find the PEO that delivers these results for your company—at no cost to you.

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