The long hot summer is over and a new season has begun. Here in the Midwest, the leaves are breathtaking in burnt orange, amber and brilliant gold. On any given weekend, one can find festivals celebrating fall harvest time. But, this year’s harvest for many small businesses may be less than bountiful.
Although small businesses usually account for the majority of new jobs, according to Intuit, Inc, which provides payroll for small businesses, the nation’s smallest firms hired just 18,000 additional employees in June. That is less than a third of the 60,000 workers that were hired in February.
Since small businesses typically are the first to hire in a recovery, this is worrisome. Hiring in larger companies usually lags behind smaller companies. Automatic Data Processing reported that in August, employment in large businesses with 500+ employees remained stable. However, medium-sized businesses with 50 to 499 workers decreased employment by 5,000 and small businesses with 1 to 50 workers decreased by 6,000.
Business owners have been on a virtual roller coaster ride earlier this year when their hopes rose at the promise of economic recovery only to fall when sales stalled last spring. Therefore, any plans they had to hire employees were put on hold-indefinitely.
Rising healthcare costs is just one of the reasons why small businesses are holding off on hiring additional workers. California small businesses are stunned by hikes of 12-23% in health insurance costs. Millions of small businesses across the nation are experiencing the same problem.
If you’re wondering if there is any good news for small business, last week’s announcement by SBA Administrator, Karen Mills, regarding the passage of the Small Business Jobs and Credit Act by the U.S. House of Representatives may be cause for some optimism. Mills said, “Today’s vote by the House to send the Small Business Jobs and Credit Act to the President for his signature is a key step forward in making sure small businesses have the resources they need to do what they do best – create jobs and drive economic growth. This bill includes billions in tax cuts specifically targeted to small businesses so they can put more of their own resources into growing their business. At the same time, this bill ensures those very businesses have access to the capital they need by extending SBA’s successful Recovery loan enhancements and putting local, community banks in a position to be a real partner for small businesses and entrepreneurs. This bill is the right step forward for our nation’s small businesses and our economy.”
Already approved by the Senate, the bill passed the House with a 237-187 vote and is designed to ease credit and cut taxes for struggling small businesses. The legislation was created in response to the difficulty small business owners have had in securing loans during the recession. In essence, the bill creates a $30-billion small-business lending fund to waive the onerous fees on loans backed by the Small Business Administration and provides $12 billion in tax breaks to help companies invest and hire. President Obama has said that he will sign the bill. So, although the skies are still somewhat ominous for small business owners, there may be a little sunlight peeking through the clouds.
I would love to know if you think small businesses can expect a bountiful harvest this fall. Just leave a comment at the end of this article.
Posted by: Mike Clough