Over the past 12 months, more small businesses have fired employees than hired new ones, according to the latest Wells Fargo/Gallup small business index. The January index reading of -10 is slightly higher than the -12 recorded in November and slightly worse than the -9 recorded in January 2011. The lowest index reading of -27 came in January 2010.
The biggest reason given by small business owners for not adding employees is that they do not need any at the present time (81%). Only 32% said qualified employees are hard to find, while 61% cite the potential cost of health care as a reason for not hiring. Some 30% are worried that they will not be in business a year from now, and 56% are wary of new government regulation.
The better news is that hiring intentions among small business owners are growing, up to +5 in January from -4 in November, but down from +14 in January 2012.
Small businesses continue to hire fewer employees than they are letting go, while overall full-time U.S. employment is, at best, keeping up with the growth of the U.S. population. The lack of improvement in small-business hiring is also consistent with the estimated -0.1% annualized growth rate for fourth quarter GDP.