SmallBiz Small Talk Not Hiring

In this Thursday, April 4, 2019, photo Kaben Clauson, poses for a photo t at his TruePublic office in Chicago. Small business owners like Clauson are wary as they see signs of a weaker economy have been scaling back hiring in recent months and finding ways to get work done without new employees. Clauson had planned on taking on full-time staffers, but partly because of the economy decided against the added risk. (AP Photo/Charles Rex Arbogast)

NEW YORK — Samantha Martin does most of the annual hiring for her public relations firm in the first quarter. But not this year — clients worried about a slowing economy are cutting their budgets, and Martin has in turn scaled back her own plans.

“Our clients are having trouble getting funding and therefore public relations and marketing are the first to get cut,” says Martin, owner of New York-based Media Maison.

If Martin’s firm has more work than her current staff can handle, she’ll hire freelancers who work by the hour. Hiring on a project-by-project basis removes the potential of having to lay anyone off.

Small business owners who are uneasy as they see signs of a weakening economy have cut back on hiring in recent months and found ways to get work done without adding employees. The latest evidence of a hiring slowdown came last week, when payroll provider ADP said its small business customers created just 6,000 jobs in March. February’s tally of 19,000 new jobs was also weak and down sharply from January’s 98,000; ADP’s small business numbers also fluctuated throughout 2018. The report, as well as the most recent jobs report from the Labor Department, clearly shows that small business hiring has lagged behind job creation at larger companies.

Small business owners, especially those who learned hard lessons from the Great Recession about overstaffing, are playing it safe. While a Capital One survey also released last week showed that 29% of 500 small business owners planned to hire in the next six months, that was down from 33% in a survey six months earlier. Of the owners who don’t plan to hire, nearly 30% said the economy is making them too nervous to spend more on staffing. The Capital One survey was in line with other surveys taken during the first quarter.

The economy is widely expected to slow this year, starting with the recently ended first quarter. Economists surveyed by financial information provider FactSet estimate that gross domestic product grew at an annual rate of 1.6% from January through March, down from 2.9% in all of 2018.

Some owners aren’t as worried about the economy, but have other reasons to be concerned about their finances and are therefore cautious about hiring. For example, their overhead is going up and they don’t want to add to those increasing costs — expenses that can make them more vulnerable to the vagaries of the economy.

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