Small Business Hiring Getting More Selective

Over the past few years, many small businesses across the country have started to find themselves on solid financial ground and consequently started to turn an eye toward ways they can expand. But this has become so prevalent among companies of this size, and hiring has become so competitive, that it’s no longer considered easy for them to hire workers.

The job market overall has been tough for a few years, and smaller companies are generally seen as the hiring engines of the national economy, according to a report from Entrepreneur. However, getting a job with such a firm is getting a lot more difficult these days, and this is actually happening for a few reasons. In 2011 – the most recent year for which data was available – only 15.2 percent of small businesses had even one employee beyond the owner, a number that’s down from 27.7 percent in 1980.

Instead, the 84.8 percent of companies that are basically being run as one-person operations are starting to contract with independent workers, rather than employees, more often, the report said. The amount of their total expenses being spent on such help increased to 6.1 percent as of 2010, up from 3.5 percent. Consequently, only 48.9 percent of all private-sectors workers nationwide in 2012 were employed by businesses with fewer than 500 employees, down from 54.8 percent in 1987.

Another issue
Meanwhile, these companies are also finding it more difficult to compete with larger businesses in terms of increasing wages, the report said. Pay for small businesses with between one and 99 employees is only up 0.9 percent in the lengthy period from 1990 to 2013, and along similar lines, it’s more difficult for these companies to provide much in the way of competitive benefits. More recently, that has started to include giving them any benefits at all.

That, in turn, is going to make it far more difficult for companies to attract the best possible candidates for job openings, and putting more small business owners in tough positions when they want to expand their employee base. However, this might serve as a good lesson as to why it’s important for such firms to make sure they’re doing all they can to keep their bottom lines healthy. That could include taking steps to find more affordable small business insurance, including policies for liability insurance, to potentially free up thousands of dollars annually, which can then be devoted to hiring efforts.