Small Company Hiring Picking Up.
After a long dry spell, hosts of small firms across the country are starting to take on workers again — a significant step in an economic recovery that hasn't seen much job creation. The nation's 23 million small businesses employ an estimated 57.1 million workers — more than half of all private-sector employees — and create more than half of the nonfarm private gross domestic product, according to the Small Business Administration.
A wave of small-business hiring could help sustain consumer confidence and tide the economy over until larger companies regain the will to significantly boost payrolls — and begin restoring the 2.4 million jobs lost nationwide since the recession began in March 2001.
The hiring has been spurred by Bush administration tax incentives and a new eagerness by banks to court small firms. But the biggest factor is improving sales. Low interest rates have kept home sales high, meaning lots of work for the small construction companies that make up the bulk of the industry. Baby boomers are retiring and laying out lots of money for specialized health-care services, which are mainly the province of small clinics. And as big companies shed jobs, they outsource more work. Even with productivity gains, small companies are finding they simply can't meet escalating demand with the workers on hand.
“Smaller companies have less of a cushion, so when demand picks up, they have so little fat there, they have to hire. So they will be the ones to generate jobs,” says Mark Zandi, chief economist for Economy.com, a West Chester, Pa., research firm.
WSJ December 4, 2003