When the Labor Department announced that U.S. employers had created a meager 32,000 jobs during July, the news didn’t necessarily mean that the nation’s small businesses are going through an economic crisis.
Economists say that as far as many small companies go, the government’s data may not reflect reality; they say small businesses are increasingly inclined to add workers.
“They’re hiring,” said William Dunkelberg, chief economist with the National Federation of Independent Business, a Washington, D.C.-based advocacy group. He said the federation’s latest survey of its members, taken in July, found that “their hiring plans improved even more.”
At Accurate Manufactured Products Group, “business for us is still very strong” despite the softness of the economy in the spring, said Matt Goldberg, president of the Indianapolis-based company.
The company, which moved this year from New York, has expanded to 20 employees from 11. It not only replaced workers who didn’t transfer with the company, but created new positions as sales increased.
“We expect to add more,” Goldberg said.
Many small companies go about the hiring process in an extremely deliberate fashion, waiting to take on new employees until their business justifies the expansion. That’s a very different approach from companies that might hire in anticipation of better times.
“I am probably one of the cheapest, slowest people to hire in the world,” said Clint Greenleaf, CEO of Austin, Texas-based Greenleaf Book Group. But with his business growing, he’s adding four staffers to his payroll of 10.
Greenleaf said sales at the book publisher and distributor grew more than 100 percent in 2003, and this year is expected to be strong as well.
“Our growth has been such that I haven’t seen a bad economy,” he said. “That said, it (the weak economy) probably adds to my level of cautiousness. … I don’t want to be in a position to fire someone.”
Herz Financial, which specializes in estate planning for the wealthy, has no plans to add staff at its offices in Farmington, Conn., or Boca Raton, Fla. Senior vice president Randy Herz said this reflects a prudent attitude toward hiring, not a slowdown in business.
Herz said the company would rather invest more in technology to make itself efficient than in new employees. So it’s more likely to buy a $20,000 piece of labor-saving equipment than hire a $45,000-a-year worker.
In expanding a staff, “you have all the headaches of hiring, firing, employment issues, management, training,” he said.
For some companies, there are issues beyond a difficult economy that affect hiring decisions.
At PR Farms, a Clovis, Calif., fruit grower, state regulations are making it hard to add to the 250-person staff, general manager Pat Ricchiuti said.
“I just feel that we’re limited in our growth and expansion because of all the issues we’re going to face. Every time we turn around, they create new laws,” Ricchiuti said.
He said it makes more economic sense to pay workers overtime than to hire more employees and incur additional workers’ compensation costs.
He also said the state’s minimum wage – $6.75 an hour, compared with the federal minimum of $5.15 – makes his company’s peaches, plums, grapes and other fruit less competitive than those produced in other states.
Ricchiuti said the combination of these and other regulations have made it hard to turn a profit.
“There are some crops now that we’re just breaking even on,” he said.
Small Business is a weekly column on the topic by The Associated Press.
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