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Attitude Check

The importance of small business hiring in the U.S.

Adriene Hill Feb 16, 2012

Adriene Hill: Small business owners are slightly more up-beat about the economy than they have been recently — which sounds like good news for the job market, considering small businesses do a majority of the hiring in the country. Turns out most of them aren’t hanging out “Help Wanted” signs.

Why? We want to know what Americans are thinking. It’s time for our weekly Attitude Check. Joining us today as he does every Thursday is Gallup’s editor-in-chief, Frank Newport. Good morning Frank. 

Frank Newport: Good morning.

Hill: So Gallup recently polled small business owners about why they aren’t hiring. What’d they tell you?

Newport: Well I think the answer’s divided into two categories and it’s very, very important to consider these kind of straight forward reasons. One, the business conditions didn’t warrant hiring new people or the cash flow didn’t warrant it — they had no need for new people.

But there was a whole second category which was broader in scope and that is they were worried about the overall U.S. economy. They were worried about health care, and they were worried about excessive government regulations on their business. So it’s the standard reasons, and also what happens in Washington seems to be affecting small business hiring as well.

Hill: And what do we know about whether or not small businesses need more people?

Newport: You know, 42 percent of small businesses who were hiring said that they still weren’t hiring as many people as they would ideally want a year or two ago, and now that’s down to 29 percent. So it looks like that’s not quite as much pent up demand on the part of small business owners now — you know, “I need people but I don’t want to hire them” as there was a year or two ago. So that’s, again, a little more progress in the correct direction.

Hill: Now what do these numbers tell us more broadly about the jobs market here in the U.S.?

Newport: Yeah, that’s a fascinating question. I think I would highlight a couple of things. One is what I mentioned a moment ago and that is we’ve seen a slight uptick in net hiring on the part of small business owners — these are people, by the way in our Wells Fargo Gallup Index, that have $20 million in revenues or less so there’s a small uptick there, that’s good news.

And the second point I would make is: Washington matters. Regulations out of Washington do affect the psyche of small business owners who are looking to hire or not hire.

Hill: Very interesting. Gallup editor-in-chief, Frank Newport, thanks.

Newport: You bet.

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