Will Small Business Hiring (Finally) Pick Up?
January 8, 2013
Now that some of the fiscal cliff issues that would have impacted smaller firms have been resolved (albeit temporarily), it's natural to wonder whether 2013 will deliver better market conditions for the small businesses that drive the U.S. economy, particularly when it comes to growth and employment. Many analysts are already declaring 2013 to be the Year of Holding Steady. While few imagine a great jump forward for the economy this year, the good news is that no one is forecasting any major back-slipping, either, barring unexpected disasters. Business credit is also loosening a bit, enabling small businesses to obtain loans more easily. According to Capital One's 2012 Small Business Barometer The NFIB Small Business Optimism Index What does this mean for small business hiring and job creation? Labor market prospects are somewhat mixed, despite small reductions in the national unemployment rate. A majority of small businesses (69 percent) say they do not plan to boost their headcount in the next six months, compared to 65 percent who said the same in the third quarter of 2011. The annual hiring forecast from CareerBuilder However, 55 percent of companies plan to keep their headcount unchanged, much like the majority of firms polled by the NFIB. There are a number of external factors causing small businesses to put the brakes on hiring in the immediate future. One is uncertainty about the economy - while the "fiscal cliff" debacle was averted at the end of 2012, it was merely delayed for two months, at which time another political showdown is likely to occur. In addition, many firms are concerned about the Affordable Care Act (ACA), which will require companies with more than 50 employees to provide health insurance benefits to full-time workers or begin paying penalties in 2014. For firms that are just below the 50 employee mark, this is a very relevant development. "Some firms may be holding back on hiring not to cross that threshold," a 2012 report from Moody's Analytics explains. Most companies, small and large, agree in their hiring outlooks that skilled employees are becoming harder to find, and more companies are holding out for the right employees rather than making immediate hires that don't fit their job requirements. The most sought-after employees today are tech-savvy and well prepared for the expanding service economy, and employers are finding that the pool is simply too small to allow them to hire the types of workers they want. Recruitment agencies that handle job candidates with technical skills are reporting a boost in interest for their services, and many companies have taken to poaching employees from competitors, with the promises of extra job perks, or using consultants to fill in gaps. On the other hand, there is evidence that more companies are making alternative arrangements to full-time hiring in an effort to control costs. The practice of "gigging," or self-employment that involves juggling multiple short-term freelance contract jobs, is on the rise. In fact, about one-third of American workers are engaged in some type of "gigging" to fill in the gaps caused by a lack of full-time, salaried jobs, according to NBC News Many companies view this type of arrangement as a bonus: they get the work done by qualified people without the need to pay benefits or provide a physical office space. "[These people belong to a growing freelance segment of the labor force, an often skilled class of career jugglers and independents who create mosaic incomes from contract gigs, projects, part-time jobs, temp work, moonlighting, and consulting," NBC News reports. "This freelance nation fills the gaps that corporate America no longer wishes to cover with full-time salaried employees." Hiring consultants is just one of the ways small businesses are coping with an uncertain economy, according to a study by PNC Financial Services