Small Business Hiring Drops as Economic Optimism Fades

Small businesses put the brakes on new hires as optimism about the economy falls to an all-time low.

Payroll service provider SurePayroll's small business owner sentiment report plummeted to an all-time low, as only 33 percent of business owners report feeling optimistic about the small business economy. That is down significantly from June, when 67 percent reported being optimistic, as well as last month, when 48 percent suggested they were optimistic. The company's Optimism Survey also found that small business owners' confidence in the government's ability to stimulate the economy remains low, despite the recent jobs proposal from the White House.

The September results for SurePayroll's monthly Small Business Scorecard, which includes hiring and wage data for the top 35 U.S. metropolitan statistical areas, showed that on a national level there continues to be flat or decreased hiring for the 12th month in a row, totaling a year-to-date decline in hiring of 2.7 percent. Wages remain down slightly (0.4 percent) for the year.

The survey also found 20 percent were more optimistic after President Obama's speech in early September, while 40 percent were more pessimistic, and 30 percent felt the president's proposal would increase jobs, while 70 percent felt it would do nothing or decrease jobs. Only 10 percent of those surveyed indicated they might hire if the plan is enacted as defined.

"The continued economic uncertainty has small businesses sitting on the edge of their seats hoping for a Hollywood ending that doesn't appear likely anytime soon," said Michael Alter, president and CEO of SurePayroll. "The good news is that small businesses are continuing to work smarter in the face of uncertainty, relying on technology to improve efficiency while still getting the most out of employees."

Alter also pointed out that small business owners continue to rely on contractors to fill their needs versus hiring new employees-contractor use showed a month-over-month (MOM) increase of 2.3 percent. A look at the SurePayroll Small Business Scorecard's MSA data shows that for the sixth month in a row, the South remains the only positive hiring region, having experienced minimal MOM growth in hiring. In contrast, the Northeast, Midwest and West all continue to show negative MOM growth. Year to date, the South is up 0.4 percent, while the other regions are all negative.

An economic indicator created by a payroll company, the SurePayroll Scorecard has provided a monthly look at national hiring and wage trends since September 2004. SurePayroll's Scorecard compiles data from over 30,000 small businesses, and reflects the trends affecting the nation's "micro businesses"-those with an average of eight employees.