The generally improving economy has served as a great boon for the health of small businesses across the country, and that trend continued into the month of December, as hiring continued to pick up for these companies in particular, albeit somewhat slightly.
In all, companies with workforces ranging from one to 20 employees added 20,000 new jobs in December, bringing the Intuit Small Business Employment Index to a rating of 95.79, up from the previous month's 95.7, which was itself a marginal improvement, according to Intuit. The most recently level was the highest observed in the U.S. since February 2009, when the Index was at 95.87, but continued declining steadily for the next 13 months. The December increase was also equivalent to annual small business job growth of 1.1 percent.
In all, these smallest of small businesses in particular – of which there are approximately 170,000 nationwide – make up 87 percent of the total private employment base in the U.S. with 19.4 million employees, so an addition of 20,000 isn't going to move the needle much in that regard.
"After no progress from May through October, small business employment has now resumed its slow rise for the second month in a row," said Susan Woodward, the economist who works with Intuit to create the indexes. "For December, the growth rate is about one-tenth of 1 percent, for an annualized rate of just over 1 percent. Small business employment continues to recover even more slowly than overall employment. The recovery for non-farm payroll employment is just under 6 percent from the trough in February 2010, while the employment recovery for private payroll, not including government, is a bit over 7 percent. By comparison, small business recovery is only 2.8 percent for the same period."
However, the news was not all good for employees, as the average amount of hours they were able to work over the course of the month slipped very slightly, as did the amount they were paid, the report said. The average number of hours declined to 107.2, from November's total of 107.4, a drop of 0.16 percent or 12 minutes. Meanwhile, the amount of money they earned for that work slipped by a single dollar (0.05 percent) to $2,694.
Revenues take a hit
Perhaps, though, that decline in employee hours and wages among small business employees was due to the fact that in general, their companies suffered a revenue drop of 0.19 percent during the previous month, the report said. Independent companies operating in nearly every sector suffered declines of some kind, save for those in the construction and non-professional services industries, which saw revenues climb 0.6 percent and 0.2 percent, respectively. For instance, real estate services led the way with an average per-business revenue drop of 0.6 percent, and professional services wasn't far behind at 0.5 percent.
Entrepreneurs across the country who are anxious about their ability to enjoy increased revenues and profit margins as they hire more workers may want to first take a look at their internal expenditures to determine whether they can make any positive changes. For instance, many companies may be paying more than they need to for small business insurance, meaning that if they were to switch plans or providers they might be able to save thousands of dollars per year, which can then be put toward other areas of need for the future success of the enterprise. Examining costs for coverage like general liability insurance, or errors and omissions insurance, might go a long way toward helping to shore up a business's bottom line.