The improving national economy has likely helped a number of small business owners improve their outlooks in recent months, and that in turn seems to have led to yet another uptick in hiring by these companies last month.
The total number of new jobs added just by small businesses in June came to 25,000, bringing the total number of new positions in the sector to 405,000 since March 2010, according to the latest Small Business Employment and Revenue Indices from Intuit. In all, that brought employment up 0.12 percent for June, and to an annualized rate of 1.4 percent growth among the roughly 196,000 small businesses surveyed.
However, these improvements were not necessarily reflected in increased revenues, the report said. In fact, there was a decline in this factor of roughly 0.4 percent in May, the latest month examined, though it should be noted that during this time, the construction sector saw revenues climb 0.6 percent.
“The gains in small business employment this month are not as large as last month,” said Susan Woodward, the economist who worked with Intuit to create the indexes. “However this month’s employment gains, paired with the upward revisions for the previous several months, add up to the biggest gains we have seen in small business employment since the recovery began. While overall revenues continued to decline, the construction sector remained stronger and continues to see year-over-year revenue growth at 7.3 percent. Despite these declines, per-business revenue across all industries remains at or above pre-recession levels.”
It is perhaps for these reasons that companies allowed employees to work longer hours and earn more money, the report said. The average monthly compensation for small business employees rose 0.5 percent to the equivalent of $2,721 in June (which equates to about $32,600 annually), while hours ticked up slightly more appreciably, to 108.9 hours from May’s 108.2, an improvement of 0.7 percent. That amounts to an average work week of 25.1-hours and marks the first increase of this size seen since the middle of 2011, even as wages have remained relatively steady over each of the last nine months. The slight boost in this regard may be unsustainable, however, just based on its size.
Hiring in some states more robust than others
In all, these Indices keep tabs on hiring practices in 36 states, and this is notable because, despite the increase, spikes were only observed in 10 of them, while one held steady and 25 actually saw hiring drop, the report said. New York saw the largest annual increase in hiring rates at 0.05 percent, though Connecticut, Massachusetts, and Arizona were not far behind at 0.03 percent. Alabama, Florida, Michigan, New Jersey, Oregon, and Texas rounded out the states experiencing improvements, while Colorado was the one that saw hiring remain flat. At the same time, Kansas experienced the largest month-over-month decline in hiring at 0.16 percent.
This may reflect the difficulties in generating revenues during the previous month, though, as the real estate industry may have been hit hardest, the report said. In all, it saw revenues drop 1.1 percent, falling for the second consecutive month. Retailers also seemed to struggle, experiencing a 0.7 percent decline in revenues overall.
Obviously, revenues and the ability to hire will factor into independent companies’ bottom lines when they’re looking to expand, and these will also affect small business insurance needs. In some cases, it may be possible to find more affordable policies for things like general liability insurance or workers’ compensation coverage, and doing so may be a significant boon to these companies.