Gusto’s analysis reveals that missed payrolls among U.S. small businesses surged by over 50% between 2019 and 2025, a trend largely driven by inflation, high interest rates, and thin cash reserves. While these failures typically stem from temporary liquidity gaps rather than terminal business failure, they act as a "breaking point" that triggers lasting employment declines. Data shows that affected firms often reduce their headcount by 8% to 10% within six months, with staffing levels rarely recovering even two years later. The report highlights a widening liquidity divide, as stronger companies have expanded their cash runways while vulnerable firms continue to operate within days of a crisis. Ultimately, the research suggests that targeted financial interventions, such as faster credit access and better cash-flow tools, could prevent these temporary shortfalls from becoming permanent economic damage for millions of workers.

To close out 2025, many small businesses did something they hadn’t been able to do as confidently in recent years: share their success with employees. New data from Gusto shows that year-end bonuses rose sharply in both size and reach, with average bonuses jumping more than 11 percent and a growing share of workers receiving a payout. These gains were broad-based across industries, from tourism and entertainment to professional services and tech, pointing to underlying strength in the small-business economy even as uncertainty lingered. In this episode, we’ll break down what’s behind the surge in bonuses—and what it tells us about how small businesses are entering 2026.

The Gusto Small Business Jobs Report for December 2025 highlights a significant recovery in hiring among American small businesses with fewer than 50 employees.

After a period of stagnation, small businesses added approximately 47,900 net new jobs, signaling a return to stable economic conditions as the new year approaches.

In this episode we walk through the latest December numbers on small-business hiring from Gusto.