National Federation of Independent Business

Small Businesses Cut Employees in July

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Not Hiring signThe latest small business employment figures are in and, after several not-so-good economic reports, they suggest that economic recovery is losing ground. The smallest firms in the country cut staff by a very small margin over the past few months, losing an average of 0.04 workers per company, according to the report by the National Federation of Independent Business’ reports.

While that margin isn’t very substantial, especially compared to the 0.11 workers that was reported back in June, it does mark the second consecutive month numbers are in the red after six straight months of flat or increased employment. The NFIB report presents slightly different findings than the ones discovered by Intuit’s latest report. That report showed that small business employment increased 0.17% in June.

Regardless, small businesses are clearly struggling to live up to their traditional billing as our nation’s most powerful job engine. According to NFIB Chief Economist William C. Dunkleberg, “On balance, July looks like a repeat of June, few jobs and no change in the unemployment rate. So far, it has turned out to be a cruel summer of dashed hopes for meaningful job creation.”

To make things worse, less than half of business owners hired or tried to hire new workers over the last three months and 86% of those reported finding few or no qualified candidates for the positions. These results are based on the responses of 1,803 randomly-sampled members of the NFIB.

Only 11% stated that they planned on adding new employees to their payroll in the coming months. Mid-Atlantic and Mountain State businesses are planning on cutting back while South Atlantic and Central states plan on adding employees this year.

The Commerce Department reported last week that the economy increased at a minuscule 1.5% in the second quarter, down from 2% growth during the first three months of the year. This effectively thwarted any hopes that recovery would steadily pick up momentum over the course of 2012.

Source: The Washington Post – Summer slump: Small businesses continued shedding workers in July

Donald Danner “Insulted” By Obama’s Remarks on Entrepreneurs

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Donald DannerDonald Danner, President and CEO for the National Federation of Independent Business, recently accused the government of making it more difficult to start a business. Danner said this right after Obama made a controversial comment in a campaign speech that he gave recently.

In his speech to small business owners, Obama highlighted the power of hard workers and government initiatives. In addition to that, Obama pointed to roads and the internet as government-made resources that are used by people who have become successful.

However, a single phrase in Obama’s speech sent the wrong message to Danner and that phrase was the following: “If you’ve got a business, you didn’t build that.” Those were the words spoken by Obama that led Danner to give this response to CNBC: “I think it’s a slap in the face of every entrepreneur out there who had a dream and risked everything he or she had to build a business.”

In addition to that, Danner added, “Entrepreneurs are special people. Not everybody works 15 or 16 hours every day. Not everybody is willing to risk everything they have to see their dreams come true.” Danner also argued that entrepreneurs need to be encouraged and that less government is the solution.

“The president doesn’t understand that the government doesn’t create jobs – individuals do,” Danner added, stating also that the people who have struggled and take risks to build businesses are the ones who create jobs. Danner believes that Mitt Romney, who is running against Obama in the coming election, will make it easier for people to start businesses and get jobs.

“We fundamentally don’t believe raising the top rate on S-Corps and LLCs is going to help create jobs. It’s going to cause people in small businesses to not invest and lose jobs,” Danner said. Danner also stated that Obama supports raising the top rate whereas Romney is against it.

The one thing Danner did say was that, when you put the president’s comment in context, the point is legitimate. Danner agrees that it is harder to start a business in a country without a government that has invested in infrastructure, like roads and education, which was the original context behind Obama’s comment.

Source: MSNBC – Small business leader says Obama insults entrepreneurs

Optimism Rises for Small Businesses

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Optimistic Small Business OwnerOptimism in small business around the U.S. saw an increase back in October. However, owners didn’t have so much cheer as they had to make the harsh plans to cut back inventory as well as trim their workforce. According to the National Federation of Independent Business, their small business index for October rose 2.7 points to 91.7 which rounded out the third straight monthly rise.

In a statement from the NFIB, they stated, “The index has been below 93 every month since January 2008 (34 months) and below 90 for 26 of those months, all readings typical of a weak or recession-mired economy.” In light of this, small business owners continued to liquidate inventories while weak sales trends didn’t give much reason to order new stock.

The NFIB also added, “Unless consumer spending picks up, the demand for new inventory will remain weak. As a result, inventory stocks at large manufacturers and importers may start to build as small business orders fail to pick up steam.”

Average employment growth per firm remained unchanged in October which was one of the best performances in years according to the NFIB. However, private sector growth is still very short of what it needs to be in order to decrease the unemployment rate.

The Labor Department put the jobless rate of the United States at 9.6% in October which, sadly, was unchanged from the month before. Payrolls of non-farms did rise by 151,000 which was the first gain since May and private hiring also rose by 159,000.

Only 8% of small business owners that were surveyed by the NFIB planned on increasing their employment from October through January. This number remained unchanged from the month of September. Of those surveyed, 13% planned on reducing their workforce which was also down 3 points from September.

Source: MSNBC

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