20
Dec
10

small business hiring doesn’t inspire confidence in a strong economic rebound

Small business in the U.S. does not seem to be hiring at too fast of a clip.  According to the Wall Street Journal, although U.S. small businesses continued to hire in November, this time adding the most jobs in a month’s time in nearly three years, according to payroll company Automatic Data Processing Inc., job growth remains modest compared with pre-recession years, and many entrepreneurs say they plan to hold back for some time to come.

Small, privately held businesses—companies with fewer than 500 employees—added a net 91,000 jobs last month, according to the ADP data released Wednesday. Though that was a sizeable jump over October’s net gain of 78,000 jobs, the average net monthly gain so far in 2010 has been just 35,000 jobs.

By contrast, small businesses in 2006 and 2007 added a monthly net average of 143,000 and 79,000 jobs, respectively, ADP’s data show.

A number of factors—including pending tax legislation, the ongoing credit crunch, and changes that owners made during the recession to stay afloat—are contributing to entrepreneurs’ restrained approach to hiring according to the Wall Street Journal.

What does this mean for consumer bankruptcy filings?  Probably more of the same. Small businesses play a major role in the U.S. economy, employing half of all private-sector workers, according to the U.S. Small Business Administration. They have also historically started adding jobs more quickly after recessions than large companies. For example, small businesses added a net monthly average of 38,000 jobs in 2003, while large businesses shed a net 22,000 jobs on average per month that year, ADP’s data show.  And the unemployment numbers are always deceiving because they do not take into account the underemployed and those who have given up looking for employment.  Add to this data the fact that the housing market still appears to be in a slum nationally and there is a recipe for continued economic hard times and more bankruptcy filings.

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