The Middle Market is the engine that quietly drives the U.S. economy. It is the “growth plate” of the nation’s job creation efforts. The U.S. Middle Market encompasses a wide range of companies that fit somewhere between the Fortune 500 and the emerging economy.

Tom Stewart, Executive Director of the National Center for the Middle Market, visited Charlotte on July 28th to discuss the state of the Middle Market and announce the Center’s latest Middle Market research for 2Q 2014. The following is gleaned from his presentation:

What is the Middle Market?

The Middle Market is made up of companies with annual revenues of $10 million to $1 billion (the category is defined by some sources as $50 million to $2 billion). The median age of these businesses is 31 years old—by and large, these are mature companies, not start-ups.

So what companies are in the Middle Market?

The Middle Market includes a wide swath of businesses—including many well-known national names. Elmer’s Glue, King’s Hawaiian, California Pizza Kitchen, Monro Muffler/Brake & Service, Ethan Allen, Tootsie Roll, Callaway Golf, Airstream and Orbitz are just some of the instantly recognizable brand name Middle Market companies.

But there are thousands of other successful Middle Market companies that operate on a regional basis. In all, the U.S. Middle Market consists of nearly 200,000 businesses—including Womble Carlyle.

That’s a lot of companies! How many jobs are in the Middle Market?

Around 44.5 million. That’s one-third of all private sector jobs in America. Another way to look at it is more people work in the U.S. Middle Market than live in the state of California.

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What type of economic impact do Middle Market companies have on the U.S. economy at large?

Put it this way—by itself, the U.S. Middle Market would be the world’s fifth-largest economy. It’s bigger than the entire economy of Germany, for example.

In raw numbers, the U.S. Middle Market brings in nearly $10 trillion in annual revenue, or roughly one-third of the nation’s private sector GDP. The Middle Market may go under the radar at times, but its economic impact is massive.

How is the Middle Market performing?

Quite well. Better than the U.S. economy as a whole, as a matter of fact:

  • The Middle Market experienced 6.6% revenue growth in the past six months and projects a 5.8% revenue growth over the next six months. By comparison, the S&P 500 projects a 3.4% growth rate during the next 12 months.
  • Middle Market companies added jobs at a 3.2% rate in the past 12 months. That’s better than either small businesses (2.1%) or large businesses (2.6%).

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  • Sixty-three percent (63%) of Middle Market companies plan to make new investments during the upcoming year.
  • Since 2007, the Middle Market has accounted for 70% of the nation’s new job creation—approximately 5.4 million jobs.

Given its economic impact, why don’t we hear more about the Middle Market?

Largely because the vast majority (80%) are privately held companies. Also, many Middle Market businesses are regional, not national, in focus.

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What does the Middle Market do well?

Middle Market companies tend to have a sharp strategic focus—they know what they do well and don’t stray beyond their core competencies. They generally are close to their customers, their owners and leadership take a hands-on approach to operations, and they tend to be conservative in managing their finances.

Where does the Middle Market tend to underachieve?

In innovation and globalization. It’s the flip side of being cautious and conservative—sometimes, Middle Market companies are slow to react to new opportunities. For example, only one-third of Middle Market businesses have global operations.

What is the National Center for the Middle Market and what does it do?

Housed at The Ohio State University’s Fisher College of Business, the National Center for the Middle Market provides a voice and point-of-view for this critical yet understudied segment of the economy, driving national dialogue about its importance and impact. The Center conducts regular research into the Middle Market.