Small businesses across the country have generally seen notable improvements to their bottom lines over the past several months or more as the economy continues to move back toward the norms seen prior to the recession. That, in turn, has led to more of these companies in particular increasing hiring, but that trend seemed to slow somewhat in November.
The number of jobs created by small businesses last month did indeed increase, but only very marginally, according to the latest data from the National Federation of Independent Business. However, that figure may be somewhat misleading because of the ways in which companies hired and laid off some of their workers. For instance, 14 percent of those polled said that they added roughly 3.7 workers during the month, compared with slightly fewer – 12 percent – which cut their workforce by an average of 3.4 workers. The remaining 74 percent of employers polled said that they made no change to the size of their workforce in November.
Interestingly, slightly more than half of entrepreneurs polled have either brought on new employees in the last three months or tried to do so, but nearly nine out of 10 of those owners – and 44 percent overall – said that they had difficulty in finding a large number of qualified applicants, or indeed, any, the report said. That was the highest rate observed since October 2007, when the recession was just beginning in earnest. Further, 23 percent of owners with job openings said they weren't able to fill them in November, up from 21 percent a month earlier, and that was also the highest level since January 2008, likewise during the recession.
"Reports of workforce reductions remained historically low, although three points higher than October's record low level of 9 percent," said NFIB chief economist William Dunkelberg. "More firms reported job creation, but still historically low. The 'difference' between these two measures is new job creation. Even if job creation is steady (the same number per month), a decline in workforce reductions will produce an increase in payroll employment as well as a decline in the initial claims for unemployment."
Future plans are a little brighter
However, despite the marginal improvement in small business hiring nationwide, it should also be noted that owners now seem to be fairly optimistic about the future, the report said. Plans to create jobs increased four points among owners, after falling somewhat in October, and are now held by some 9 percent of owners nationwide on a seasonally adjusted basis. Unadjusted, however, it seems 13 percent of businesses plan to hire, and that was an increase from 11 percent a month earlier. Meanwhile, 11 percent plan to cut positions in the near future, down from 12 percent.
Of course, the ability of small businesses to hire is largely contingent on not only current revenues, but also those expected in the future, and as such it may not always be easy for owners to simply increase hiring even at this point in a recovery period. Consequently, entrepreneurs may need to do a little more on their ends to make sure their companies – and prospects for future hiring – are a little more secure. That might include looking into ways that they can reduce internal costs that might be thinning their margins unnecessarily, such as small business insurance. While this kind of coverage is obviously necessary, the high costs many companies pay for it isn't. Therefore, shopping around for lower prices on workers' compensation or general liability insurance may go a long way toward ensuring a company's hiring prospects and future success.