The Economic Divide Between Big and Small Companies Is Growing
Economic fortunes of low- and high-income Americans are diverging—same pattern happening with companies
By Harriet Torry and Justin Lahart, The Wall Street Journal, Dec. 25, 2025
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The growing divide between the fortunes of small and large businesses mirrors the divide that has emerged over the past year between low-income Americans and their high-income counterparts.
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Large, publicly traded companies in the S&P 500 saw net income increase by 12.9% in the third quarter, contrasting with faltering small-business profits.
Small businesses are facing economic headwinds, including high inflation and cautious consumers, leading to job cuts; 120,000 jobs were shed in November.
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Main Street businesses’ health is also important for the U.S. economy. Small businesses—those with up to 500 workers—employ nearly half the American workforce and represent more than 40% of gross domestic product, according to the U.S. Chamber of Commerce. But small-business profits are faltering, according to an analysis of small-business bank accounts conducted by the Bank of America Institute, which found that earnings are slightly lower than they were a year ago.
Small businesses’ margins and cash reserves are typically thinner than those of large corporations, making it harder for them to absorb higher costs. They lack the kind of access to financing and expertise that large companies can deploy to weather challenges such as high tariffs and the sharp slowdown in the supply of immigrant labor…
Goods like wine, cheese and replacement parts for equipment have gone up in price due to tariffs, but labor, rent and insurance have also soared… [end quote]
The fade of small businesses and the decline of raises for lower-income workers will lead to even greater income disparities. This will impact workers all over the country, especially in rural areas where there aren’t many well-paid jobs.
Though it’s not as obvious as the trends impacting the large companies in the S&P500 it’s a significant Macro trend that will affect millions of households.
Wendy