Jobs

Small Business Hiring Is Better Than Before the Recession


A job seeker fills out an application at an Illinois Department of Employment Security job fair in Chicago on July 25, 2013

Photograph by Tim Boyle/Bloomberg

A job seeker fills out an application at an Illinois Department of Employment Security job fair in Chicago on July 25, 2013

Small business hiring is finally rebounding. For years after the recession ended in 2009, economists and politicians said the job market needed small and growing businesses to bring down the unemployment rate. As Bloomberg News’ Alexandria Baca reports today, small companies are finally getting there:

“Employment at companies with fewer than 50 workers … is stronger now than before the last recession, while larger businesses are still lagging behind, according to data from Automatic Data Processing Inc., a manager of employer payrolls. Establishments with less than 10 employees are hiring at a faster clip than before the downturn began in December 2007, Labor Department figures show.”

Companies with less than 50 workers employ about 47.5 million Americans, according to ADP’s data (Excel document), more than they did before the recession started in 2007. Companies with more than 50 workers, in aggregate, lost more jobs than smaller businesses during the downturn. Though the larger businesses have added millions of jobs since the depths of the recession, companies with more than 50 employees employ about 66.2 million workers in the U.S., still about 2 million fewer than before the recession, according to the ADP data.

The recovering housing market and a pickup in lending have helped small businesses, and they’re growing more confident in the economy. Still, government spending cuts and wariness about the strength of the recovery have kept businesses deliberate about the hires they make. As Baca reports:

“A leaner staff might also be a sign of caution among small companies seeing if demand justifies hiring. One such watchful business owner is Lisa Goodbee, a civil engineer who heads a Centennial, Colorado, firm specializing in transportation projects. She hired one full-time and one part-time worker last fall, waiting until business had recovered sufficiently to sustain the additional overhead. The 19-year-old firm has a total of five full-time and eight part-time employees.

“’State funding for transportation projects was really, really lean’ in 2010, said Goodbee, 51, who estimated her gross revenue fell to about half of its $2 million target that year. “I didn’t have to lay anybody off, but we definitely had a slowdown in our business, and then 2011, 2012, we’ve picked right up.’”

The unemployment rate in the U.S., at 7.4 percent, is the lowest since 2008, but it’s still high. Job creation has been steady but less robust than it has to be to bring that number down quickly. Clearly, small businesses hiring is good news—but small companies alone won’t solve the unemployment crisis.

John_tozzi
Tozzi is a reporter for Bloomberg Businessweek in New York.

Tim Cook's Reboot
LIMITED-TIME OFFER SUBSCRIBE NOW
 
blog comments powered by Disqus