Unease about economy stalls small-business hiring

If you’re waiting for the small-business economy to recover fully from the recession, you’ll have to wait some more.

Two separate studies show flagging optimism and sluggish hiring among companies with 100 or fewer workers.

Start with the Small Business Optimism Index from the National Federation of Independent Business, released Aug. 13. The index came in at 94.1 in July, up about half a point from June, but still well below the 100-point average. It was also half a point below its reading in December 2007, when the recession began.

Those sentiments are important because companies with fewer than 100 workers employ more than half of Nevadans. If smaller operators don’t feel good about the future, that could affect their willingness to invest in hiring and expansion.

Taxes and government regulations tied among respondents to rank at the top of the list of problems, with each receiving 21 percent of the vote. Poor sales came in second, with 16 percent of companies saying that was their biggest problem. Insurance cost and availability ranked No. 3, at 8 percent.

Randi Thompson, state director of the federation, said Nevada businesses have the same concerns. Even though its employer mandate is delayed until 2015, the Affordable Care Act creates uncertainty about company health-insurance costs, she said. Plus, a proposed margins tax will be on the state ballot in 2014. The levy would put a 2 percent tax on any business revenue over $1 million, minus company costs and compensation. There’s also talk of boosting sales taxes in both Las Vegas and Reno, to help fund police and schools.

Worse still, personal incomes in Nevada dropped in the first part of 2013, which could mean lower sales as consumers get nervous about spending.

Put it all together, and small businesses just aren’t hiring: Employment nationwide dropped by 0.11 workers per firm in July, for the third straight negative reading.

“Even though taxable sales and gaming revenue are up a little bit, we’re not feeling it,” Thompson said.

If they want to hire, it can be tough for owners of smaller firms, 20 percent of whom said they couldn’t find qualified people to fill jobs in July.

“Overall, there’s a feeling of uncertainty and indecisiveness that’s leading employers to say, ‘I just don’t want to hire,’ ” Thompson said.

That trend is especially apparent in Las Vegas, according to another report.

The SurePayroll Small Business Scorecard found that staff counts among local small companies fell 6.3 percent year over year in July. And the average paycheck fell by 7.1 percent. Nationally, the numbers were flat, with a 1.7 percent decline in rosters and a 0.1 percent drop in paychecks. Across the West, employee counts fell 3.2 percent, while paychecks dipped 0.7 percent.

But rather than poor confidence in the future, SurePayroll traced slow hiring to technology. Nearly three-quarters of small businesses said they’re doing more business online now than they did a year ago, and 84 percent reported using new tools including online advertising and social media.

“Technology seems to be driving this jobless recovery in the small-business economy,” said SurePayroll President and CEO Michael Alter. “We’ve seen this trend for a while now, and our data this month really supports the idea that small businesses are leveraging technology to be more efficient, and so they’re able to grow without hiring.”

Contact reporter Jennifer Robison at jrobison@reviewjournal.com or 702-380-4512. Follow @J_Robison1 on Twitter.

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