NEW YORK (AP) – Corri Smith is planning to hire a full-time project manager for her public relations firm and make her part-time assistant full-time. But she has a wary eye on the economy.
“It’s been a long time since we’ve had some trouble in the economy. It can’t all be wonderful — something will happen,” said Smith, owner of Charlotte, North Carolina-based Black on Wednesday.
Smith, who believes an economic downturn is likely in the next 12 to 18 months, said, “I will be extra cautious with hiring alongside also making plans to stockpile and save revenue.” She’s aware that marketing is one of the first budget items to be slashed when corporate executives are anxious about profits.
Small business owners, who have taken a conservative approach to hiring during the economic expansion, are becoming even more careful amid concerns that the economy is weakening. They’re well aware that economists believe the country’s gross domestic product slowed considerably in the second quarter — forecasts give the gross domestic product (GDP) an annual rate of about two per cent, down from 3.1 per cent in the first quarter. Owners’ concerns and caution are increased by the Trump administration’s trade wars.
Some owners are cutting jobs, likely by not filling their open positions as well as by laying off workers. A report from payroll processor ADP released on Wednesday showed that its business customers with up to 49 employees cut 23,000 jobs in June on top of a 38,000 reduction in May; this is the first time ADP has reported job cuts since September 2017. So far this year, small businesses have added about 25,000 jobs on average each month, compared with an average 52,000 last year and 56,000 in 2017. Their hiring pace has lagged behind that of larger companies, which have fed the hiring boom in the country the past few years.
Although the Great Recession ended 10 years ago, small business hiring never recovered to the levels before the downturn began in 2007. Owners who had laid off workers didn’t want to go through that devastating process again, and new entrepreneurs learned from the unhappy experiences of others.
Hiring is an ongoing balancing act for Scott Fish and business partner Sonja Skvarla, co-owners of Off Road, a business consulting firm based in Portland, Oregon.
“Businesses are charging ahead, but there is a small element of uncertainty in the economy, and we are noticing that it continues to be on the minds of business owners,” said Fish.
Many small businesses also struggle to find qualified workers. While that can be a problem for companies of all sizes, small businesses generally can’t offer the salaries and benefits that big corporations do, and with an economy that’s looking iffy, the smaller player are at an even greater disadvantage.
Because of competition for staffers from giants like Google, Facebook and Netflix, not only does software maker Gunner Technology not expect to hire in the next year, “we are looking at how we can get by without replacing employees we are sure to lose,” Chief Executive Officer (CEO) Cody Swann said.
Swann’s solution is to automate some of the work that software developers generally do at his Las Vegas-based company; for example, reviewing software coding to detect errors.
The tariffs that the Trump administration has placed on thousands of products imported from China and retaliatory duties placed on US goods are affecting many small businesses, even if they’re not importers or exporters. Software manufacture Joe Wilson might have to put off hiring freelancers if he feels the ripple effects of tariffs that his customers must pay.
“These issues impact the economy and people’s confidence in the economy. It’s easy for a business to defer spending money on a software project for a couple of quarters if they are worried about these things impacting their sector,” said Wilson, owner of Volare Systems, based in Highlands Ranch, Colorado.