Industry trends determine small-business hiring
If you are trying to figure out if small businesses are hiring, it depends on where you look.
Just last Friday when the government was raising suspicious eyebrows with its report of a sudden drop in the unemployment rate so close to a presidential election, Andy Asbury was hiring a full-time employee to work at his Minneapolis real estate brokerage.
For Asbury, the need for a new employee was clear. Sales at his agency, Better Homes & Gardens Real Estate Area Leaders, are up 25 percent from a year ago and he’s expecting them to rise more next year as the housing market continues to improve. He’s getting signals from prospective sellers that things are going to get busier and he’s gearing up.
“People are planting the seeds right now for when they want to make their move,” he says.
Small businesses employ about half the nation’s workforce, or about 60 million people, so keeping track of how small-business owners like Asbury are faring is key to figuring out if the economy is getting better or worse.
There are some encouraging signs.
The number of salaried real estate workers has risen by 195,000 in the last 12 months. In the auto industry, including parts makers, employment is up by 51,700, or 7 percent. The BLS doesn’t break out employment in health care consulting services, but hiring at management and technical consulting services for businesses is up by 637,000 or 5.8 percent.
There’s also an often overlooked form of small business hiring – people who start their own companies and become self-employed. In September, 118,000 did that, according to the Labor Department.
But for all the good news, skeptics can find their fair share of evidence to support a gloomier view. Many defense contractors are waiting to see how much Pentagon spending is cut under what’s called sequestration. The budget cuts, which may be triggered Jan. 2, would come because lawmakers couldn’t reach a budget deal – unless Congress stops them.
It’s been difficult to get a clear picture of small-business hiring because there have been so many differing reports. A report Tuesday from the National Federation of Independent Business showed a fourth straight monthly drop in hiring at small companies during September. “We’re in a recovery, but it’s still tepid and small business is not getting its share of the recovery – but maybe it will be soon,” says Susan Woodward, an economist with Sand Hill Econometrics in Palo Alto, Calif.
Here are some snapshots of small companies that are hiring or holding off:
Cruising along with auto sales
At PRISM Plastics, based outside of Detroit, the recovery in the auto industry and the demise of many of its competitors during the recession created more demand. PRISM makes seat belts, airbag parts and other car components. The company has been hiring for more than a year and opened a new plant in Chesterfield Township, Mich. It has about 20 new workers and five open positions.
“You want to give everyone a break and sometimes we get people in who are very nice guys and good people that maybe lack the skills you need, and those are the people you feel the most for,” say owner Gerry Phillips says. “You feel bad about the people you can’t hire.”
Hil, Chesson & Woody, a Chapel Hill, N.C., health benefits brokerage and consultancy with 51 employees, is hiring because companies need them to help navigate the health care overhaul that Congress passed in March 2010. The company has hired three people in the last three months and plans to hire two more this year. And because many parts of the health care law won’t take effect until 2014, it expects to hire at least six more people in 2013 and a minimum of six in 2014.
The firm’s clients are in the dark about the law, says co-owner Skip Woody. “They don’t know how it will impact them,” he says.
Applicants are becoming more aggressive because they’re so eager to be hired, Woody says.
Although the busy holiday season is approaching, Roberta Rubin isn’t planning to hire more employees for her Winnetka, Ill., bookstore, The Book Stall at Chestnut Court. She just took on two part-timers, but only because other employees cut back their hours. Her overall staffing level won’t change.
“I’m not real happy with the economy right now and I worry — but I have great faith in the book business,” says Rubin, who has owned the store for 30 years. Rubin is faced with changes in the book business as more people download digital versions.
Yet The Book Stall is busier since three nearby Borders stores closed in April 2011. “That’s been such a bonanza for us,” Rubin says.
“We’re being guarded right now. We think we’re OK, but I’d still say we’re nervous,” says Mark Gross, owner of Oak Grove Technologies, a North Carolina company whose services include helping the Defense Department train military personnel in intelligence and security.
Gross isn’t hiring while he waits to see if the Army and other service branches have to cut the number of employees they use for their training programs. “We don’t know what programs are being cut,” says Gross, who has 120 people in administrative jobs and 480 who work on contracts with the government.
Gross has not only put off hiring, he’s also delaying plans to buy a smaller company that provides similar services to the government. “Right now, there’s no way to plan,” he says.