Any American with a basic understanding of economics must recognize one undeniable truth: Small business is at the heart of the Nation’s economy. And according to a recent Wells Fargo/Gallup poll, the country may be headed toward a flatline.
The poll indicates that a majority of American small-business owners report that they are letting more employees go than they are hiring due to a number of economic factors beyond their control. A net hiring index of -12 was reported for April; that’s fewer hires than January, with a hiring index of -10, and April 2012, when the same poll illustrated a hiring index of -9. The most dismal hiring numbers were reported in January 2010, according to Gallup, when it dipped all the way to -27.
Unfortunately, American small-business owners were fooled by reports of economic turnaround in the past several months; many of them expected to add jobs if the economy allowed. Employers’ earlier recorded hiring intentions stood at +6 for April, according to the poll.
[F]our in 10 small-business owners say they have held back on hiring, and one in five owners say they have let employees go, due to the healthcare costs associated with the Affordable Care Act. As implementation of the law continues, the number of small-business owners who take these steps could increase.
Further, Gallup’s Payroll to Population (P2P) measure is no better at the end of the third week of May than it was in May 2012. In turn, the lack of improvement in this overall job measure suggests that many small businesses — the key drivers of job growth — are not doing a lot of hiring of full-time employees, consistent with their April hiring intentions.
The polling organization reports that other polls show that American small businessmen continue to report an optimistic outlook for the economy, but the optimism simply isn’t, to this point, reflected in hiring-enabling business growth.