Small businesses across the country are having second thoughts about hiring more employees during the remaining months of 2007 given recent troubles in the housing and credit markets.
Forty-nine percent of 352 companies with 15 or fewer employees said they were not going to hire employees in the fourth quarter, according to a survey conducted by the Alexandria-based National Association of Professional Employer Organizations.
A slightly smaller portion of employers, 47 percent, said they would hire, although the majority of this group reported having difficulty finding qualified workers, said Milan Yager, NAPEO executive vice president.
A survey in March 2005, done by Texas-based Administaff, found that 59 percent of small companies intended to hire, according to a 2005 NAPEO press release.
NAPEO is the trade association for companies that provide human resources services for small businesses.
In the mid-Atlantic region, Yager said that the decision not to hire is “not as prevalent as it is in other regions of the country” and the area would still probably see overall growth. Employers continue to notice a lack of qualified candidates, said Yager, who added that small businesses might have to offer more benefits to prevent migration to larger companies.
Small businesses are also apprehensive about the impact of the slowing housing market and subprime mortgage crisis, Yager said.
They are concerned that credit might become tight for consumers and they will be less likely to spend money, he added.
“Small businesses in general are very nervous,” he said. They are usually the first to feel the impact of the economic trends, he added, describing them as a bellwether for the economy.
The cautious attitude among small-business owners isn’t likely to translate into layoffs, though. Only 4 percent of those polled indicated they were going to resort to cutbacks in the last months of the year.
One of the reasons is that small business face greater risks when hiring and firing than larger companies, said Courtney Anderson, consultant and president of a small business, Courtney Anderson & Associates LLC.
“The smaller you are … everything is magnified,” Anderson said. “If I get rid of someone, I wonder how long it will take me to replace the person.” Then there’s always the possibility of a higher level of incompetence, she added.
