Small US Businesses Scrap Hiring Plans

US small-business owners’ net hiring intentions for the next 12 months plunged to -4 in November, from +10 in July, and owners expect to add fewer net new jobs in the next 12 months than at any time since the depths of the 2008-2009 recession, according to the November Wells Fargo/Gallup Small-Business Index survey.

One in five owners also expects to reduce the number of jobs at their companies over the next 12 months, suggesting small-business owners are pessimistic about their operating environment as 2012 comes to a close. The report warned of the potential for a serious decline in jobs early next year if small-business owners’ hiring intentions do not improve.

Too few new jobs

In addition to asking about future hiring intentions, the survey also asked small-business owners to report on hiring over the past 12 months. In November, more small-business owners reported decreasing the number of employees (26 percent) than increasing (14 percent) them, resulting in a net hiring score of -12.That figure is down from -7 in July and -9 in the prior three quarterly measurements. Net hiring over the past 12 months is about where it was in July 2011, at -11.

“This lack of improvement in small-business owners’ self-reported hiring helps explain why too few new jobs have been created during much of 2012 to significantly lower the US unemployment rate,” the report noted.

Worryingly, small-business owners’ self-reported hiring suggests deteriorating job growth over the past year, but not nearly as severe a decline as is implied by owners’ hiring expectations for the next 12 months.

The 14 percent of small-business owners who in November reported increasing their company hiring over the past 12 months is unchanged from July. However, the 26 percent reporting a decrease in the number of jobs at their businesses in the past 12 months is up from 21 percent in July, and is the highest level since November 2010.

Fiscal cliff

“Whether the pessimism of the nation’s small-business owners is due to the fiscal cliff, Superstorm Sandy, the election, or some combination of these factors, the US economy remains weak and unemployment remains high from a historical perspective,” the report concluded. “A further sharp increase in small-business layoffs, resulting in higher unemployment on top of the current economic conditions, could turn today’s slow-growing US economy into something worse.”

The information on small-business hiring trends comes as the national unemployment rate, which was stubbornly stuck above 8 percent until the fall, dropped to 7.7 percent, according to the Labour Department’s most recent report.

That figure marks the lowest unemployment rate since the financial crisis of 2008. “It looks like the job market is holding firm,” Moody’s Analytics chief economist Mark Zandi told NBC News. “That’s encouraging in light of all the fiscal uncertainties.”

Do you know all about public sector IT – the triumph and the tragedy? Take our quiz!

Nathan Eddy

Nathan Eddy is a contributor to eWeek and TechWeekEurope, covering cloud and BYOD

View Comments

  • Time to implement a Human Investment Tax Credit program.

    Aimed at creating 6 million jobs and helping 4 million small firms, an early Discussion Paper preceded the Jobs Tax Credit of 1977, which generated 2 million jobs with weak versions of the suggested incentives.

    A much more recent version can be found at http://www.aesopinstitute.org

    Look under "MORE" on that website to find it.

Recent Posts

Google Jarvis AI Extension Leaked On Chrome Store

Seemingly accidental leak reveals Google is developing Jarvis AI extension that can browse the web…

2 days ago

Amazon Mulls New Multi-Billion Dollar Investment In Anthropic – Report

Amazon is reportedly in talks to pump billions of dollars more into AI start-up Anthropic,…

2 days ago

FTX’s Caroline Ellison Begins Her Two Year Prison Sentence

Star witness for the US prosecution of FTX founder Sam Bankman-Fried, has begun her two…

2 days ago

More Layoffs For iRobot Staff After Abandoned Amazon Deal

After axing 31 percent of its workforce when it failed to be acquired by Amazon,…

3 days ago

Mozilla Foundation Confirms Layoffs, Eliminates Advocacy Division

Mozilla Foundation axes 30 percent of its staff, and is eliminating its Advocacy Division that…

3 days ago

Google To Make MFA Mandatory Next Year

Improving security. Mandatory multi-factor authentication (MFA) is coming to the Google Cloud by the end…

3 days ago