Small businesses lead economic recovery
The success of the American small business and an economic recovery go hand in hand – according to many economists.
But a new study from a payroll services company suggests things are slowing down for smaller companies, particularly in the area of hiring new workers.
Some analysts say that’s bad news for the nation.
Intuit Inc. tracks the data from 56,000 customers around the county that it considers to be small businesses. In this case that means companies with less than 20 employees.
Intuit’s findings indicate small businesses hired 18,000 new employees in June. While that’s still in positive territory, it’s the fewest new hires since October of 2009.
The downward trend started in February. That’s when smaller companies added 60,000 jobs, and it seemed like employment numbers would keep rising. But Intuit found small businesses consistently hired fewer people throughout the spring – dropping to 40,000 in April and 32,000 in May.
The reason economists pay such close attention to the hiring practices of small business is because they typically lead the way in an economic recovery. If the little guys are reluctant to hire new help, then big companies are going to add jobs at an even slower rate.
Brian Headd with the Small Business Administration points out that while companies employing less than 20 people make up 1/6 of America’s workforce, those companies have added 1/3 of all new jobs in the private sector so far in 2010.
Experts believe small business hiring is what drives the unemployment rate down. If small businesses are struggling, then problems that can lead to recession are growing.
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Brian Headd of the SBA points out that it’s very possible hiring figures will rebound this month. Small businesses also added jobs sporadically following recessions in 1992 and 2003.
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