Small Business Jobs Crippled, as Job Security in Larger One Rises

Jobs

Published: May 29, 2013 6:49 am

Last Updated: May 29, 2013 7:18 am

The job market always has been broken in two by employment experts. One segment is the employment among firms with 100 positions or less. The other is at bigger companies, which range, for measurement purposes, to firms with as big as 10,000 employees or greater. The situation of job creation at smaller companies is troubled. And that trouble likely will be a headwind for the overall economy.

Often, researchers say that most job creation comes from smaller companies. It is the level at which most new businesses are formed. In a good economy, management can add people quickly without going through levels of decisions. Larger companies are hampered by corporatewide budgets and human resources department that may set complex rules.

One of the trends that emerged during the recession was that credit was unavailable to small business. But larger ones often were considered reasonable credit risks by financial institutions. The source of job creation changed. And that process may not nearly be over.

According to new data from the Gallup Small Business Index:

More U.S. small-business owners report letting employees go than hiring them on average over the past year, for a net hiring index of -12 in April, according to the Wells Fargo/Gallup Small Business Index survey. This is on par with -10 in January and -9 in April 2012.

These small businesses either believe the recovery has not taken root or they still do not have access to capital. Which one it is does not matter as much as the fact that, for a real improvement in the jobless situation, hiring trends probably need to be up across the board of all companies, regardless of size.

The other factor that has hurt the jobs market and robbed many people of incomes they might have enjoyed before the downturn is that in cases where jobs are available, they often are not full time and do not come with benefits. Much of the labor force has to live on compensation packages that have lost value, whether or not jobs are available.

Gallup’s conclusion is that economic confidence has not returned to “Main Street.” The recession is not nearly over in many places, and at many levels around the United States.

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