New EY Report – Private Equity Fuels Job Growth, High Wages, and Small Businesses
Washington, D.C. – The private equity industry and private equity-backed companies continue to be a major driver of job growth, high wages, and economic stability, according to the latest edition of a report released by the American Investment Council and Ernst & Young LLP (EY). Private equity directly employed 12 million workers in the United States in 2022, up from 11.7 million jobs in 2020, and generated $1.7 trillion of gross domestic product (GDP), or approximately 6.5% of total GDP. Workers at private equity-backed businesses earned approximately $80,000 in annual wages and benefits, up from $73,000 in 2020.
“This latest report from EY confirms that private equity investments are a major driver of economic growth by supporting small businesses and paying high wages to the millions of workers those businesses employ,” said AIC President and CEO Drew Maloney. “Over the past two years, the number of jobs at private equity backed businesses has grown and the wages paid to workers at private equity-backed businesses has increased, all while other sectors of the economy have struggled.”
The study outlines private equity’s contributions to the overall U.S. economy, including these details:
- Major Employer – The private equity industry in the U.S. directly employed 12 million workers in 2022, an increase from the 11.7 million workers the industry employed in 2020.
- Supports Small Businesses – Private equity continues to invest heavily in small businesses. In 2022, the median private equity-backed business employed just 69 workers. Approximately 85 percent of private equity-backed businesses were small businesses that employed less than 500 workers.
- Pays High Wages – Private equity continues to support the well-being of workers nationwide. The average worker at private equity-backed business earned $80,000 in wages and benefits in 2022, an increase from $73,000 in 2020.
- Fuels Economic Growth – Private equity investments generated $1.7 trillion of gross domestic product (GDP), an increase from $1.4 trillion in 2020. These investments amounted to approximately 6.5 percent of total U.S. GDP.
- Tax Contributions – Private equity investments generated tax revenues that supported the federal, state, and local governments. In 2022, private equity paid $304 billion of federal, state, and local taxes. Approximately two-thirds of these were federal taxes ($208 billion) with the remaining taxes paid to state and local governments ($95 billion).
- Multiplier Effect – Suppliers to the U.S. private equity sector employed an additional 7.8 million workers across the economy. Those workers earned $700 billion in wages and benefits and generated another $1.1 trillion in GDP in 2022. This activity supported an additional $207 billion in federal, state and local taxes.
The report estimates the current economic activity of, and related to, the US private equity sector – including US private equity firms and private equity-backed companies – within the US economy in 2022. The American Investment Council and EY last released this report in 2021, which examined private equity’s contributions to the U.S. economy for the year of 2020.