Hire Up
The numbers don't lie--small-business hiring is still resilient.
Small improvements can add up to big improvements over time. And
the continued slight increases in small-business hiring shown by
the Sure-Payroll Hiring Index suggest that entrepreneurs are
showing major resilience in a tough business environment. "We
don't have robust hiring," says Michael Alter, president
of SurePayroll, "but we do have positive [hiring]
growth."
The index, compiled by the Skokie, Illinois-based payroll
service, stood at 10,494 at the end of August, barely higher than
June's 10,466. But, Alter notes, it's up nearly 5 percent
from January 2004. The latest figures also mark 17 months during
which there was only one down-tick in small-business hiring.
The Northeast led the nation in regional hiring. In fact, its 7
percent increase in small-business payrolls was the only increase
among the regions. Alter says Northeast entrepreneurs were catching
up after a rough 2004. And all employers increased their use of
contractors in lieu of hiring full-time employees, a persistent
trend that Alter ascribes to caution in an uncertain economy.
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Salary levels, however, have not staged a rebound. Average wages
for small-company employees dropped 2.3 percent for the year
through August. To Alter, that suggests the troubling specter of
lower consumer buying power, as prices for fuel, health care and
borrowing increase. "I'm starting to get concerned about
stealth inflation," he says. "At some point, that has got
to come around and hit the small-business economy."
The net effect of the aftermath of Hurricane Katrina is a
question mark. At issue is which will be stronger: the positive
effects of spending to redevelop the affected areas or the
downdraft of unemployment and business interruption among people
and companies hurt by the storm. "It's going to go down
before it goes up," Alter forecasts.
There's no question that small employers have so far proved
amazingly resilient, which bodes well for almost all likely future
scenarios. Says Alter, "To have any growth at all in the face
of costs going up is impressive."