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Small business tries to create jobs

Jennifer Collins Aug 17, 2011

Small business tries to create jobs

Jennifer Collins Aug 17, 2011

Kai Ryssdal: Cast your mind back with me to the beginning of the month. Seems like forever ago, I know, but it’s been only two weeks, actually — that we got the July unemployment report. 117,000 net new jobs were added to the economy last month, all of them from the private sector. That is, companies, not the government. As we know all too well by now, we’re not adding new jobs fast enough, because, to make a very long story just somewhat shorter, businesses aren’t sure they’re going to have enough work.

Marketplace’s Jennifer Collins went out to find out how one of those new jobs came to be.

Jennifer Collins: Bob White’s family has owned a small manufacturing company in an L.A. suburb for more than 50 years.

White’s business, Janda Company, employs 23 people.

Bob White: We make machines that would make your shopping carts, machines that would make bumpers, machines that would make parts for Boeing or Lockheed for the aerospace industry.

Last November, orders for those machines quadrupled. White started running the company 10 hours a day and on Saturdays, but he debated adding to his payroll.

White: Do we really need to hire another person? Or should we just work more hours? Or why should we hire that person?

Janda is one of 29 million small businesses in the U.S. These companies employ half of all workers in the country. Many are struggling to grow. That’s according to Pepperdine University professor John Paglia.

John Paglia: The primary concern of business owners in this economy is access to capital.

Loans and lines of credit. The Obama administration has promised $12 billion in loan guarantees for small businesses. Private banks loan most of that money.

Pagalia: They’re having a tough time sorting through the applications for these small business owners because of the spotty recent financial performance.

Paglia says banks want to see a boost in revenue before they make loans. And because of the recession, few businesses can show cash flow, and so they can’t get the money to grow and hire.

Collins: Do you have any examples of businesses that have been successful in adding jobs?

This is Paglia’s actual pause. Now keep in mind he surveys hundreds of small businesses for Pepperdine.

Paglia: No. Let me think for a minute.

Linda Bidrossian counsels several small businesses through the Los Angeles nonprofit SCORE. I asked her the same question.

Linda Bidrossian: Right now? None. The need is certainly there. Every single one of my clients, at least I would say they would ask for five people or more.

Bidrossian says that’s preventing small business — which she calls feeders — from becoming larger.

Bidrossian: If we don’t have the feeder business that are basically the fuel to our economy, that’s a problem.

Back at Janda Company, Bob White was still resistant to hire. That is, until he started falling behind on orders for equipment.

White: Going crazy and it’s like we need more help, we just can’t get the product out.

In desperation, he reached out to Joe Talley, the grandson of a current worker. Talley had been unemployed for over a year.

Joe Talley: My grandpa called and said, “Get your butt down here, you got a job.” So, I showed up and started working.

Now, he’s learning to weld and getting other on-the-job training.

Talley: Doing whatever they tell me to do and watching them do it and trying to do it myself.

Collins: And you’ll be here for as long as you can?

Tralley: As long as they’ll let me stay.

So Talley has a job, but his boss Bob White is cautious about creating another.

White: Because I’m afraid to hire someone. Once we hire someone today, then all of the sudden six months downstream when we start slowing up again, we don’t want to have to lay that person off.

And other business owners may be feeling that anxiety too. A recent survey from Gallup shows 16 percent of small business owners expect to hire in the next year. That number is about half of what it was in January.

I’m Jennifer Collins for Marketplace.

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