Surveys: Small Business Less Likely to Add Employees
By Alexander MacInnes
July 17, 2011 - Two sobering business surveys, a weak June jobs report and interviews with local business owners show a continued reluctance to add new employees anytime soon.
On July 8, the federal government announced employers added just 18,000 jobs in June, the fewest new hires in nine months. The U.S. Chamber of Commerce on Monday released its survey of 1,409 small-business owners, 64 percent of whom said they will keep the same number of employees over the next year. The next day, another business group, the National Federation of Independent Business came out with its June Optimism Index, which showed 11 percent of owners will hire new workers, down 2 percent from May.
Locally, small-business owners interviewed last week say they will likely retain an already slimmed-down workforce, even if business grows. They would rather shovel more work to fewer employees, even if it means paying overtime.
"I typically have done well over the last year or two by not hiring and keeping my core group of guys and having them work longer hours, than hiring more men," said Kevin Nordman, president of Saddle Brook-based Raised Computer Floors.
Nordman's company employs 10 workers, seven of whom are in the field installing modular computer floors for commercial clients like banks and data centers. Revenues are down 60 percent since 2009, but Nordman says his company has remained profitable through that period because he has kept his employee base small.
"If it gets busier, I would hire more, but it would have to be significantly more busy," he said. "The revenue growth in our industry is just not there yet."
Total employment in New Jersey over the last year has remained relatively flat, according to statistics from the Department of Labor and Workforce Development. New Jersey reported 3.86 million jobs in May, the latest available state data. That is a drop of 8,000 jobs since April 2010, but the state has seen a slight increase since December.
Small-business owners appear to remain cautious when deciding on new hires, said Laurie Ehlbeck, director of the New Jersey chapter of the National Federation of Independent Business.
"They're still so nervous about what's going on nationally to take the next step," she said. But interviews with North Jersey small-business owners indicate their hiring decisions depend on how much business they are getting.
Tim Tiger, president of Tim Tiger Enterprises, a fire sprinkler installation firm in Franklin Lakes, is uncertain that he can keep all of his 18 employees, most of whom are union tradesmen and pipefitters in the field.
"I can handle all the work we have very easily," he said. "With the work we have, I actually don't know if I can keep all of them. We may be down a few people by the end of the summer."
Even companies that are seeing a slight pickup in business are critically analyzing any new hire.
Ridgewood Closets and Northeast Shower Installers manufactures custom closets and shelves for residential clients. The size of the job ranges from about $1,000 for a simple closet installation to $50,000 for a project for a large house, said Scott Leishman, a vice president with the Saddle Brook company.
Leishman said he hopes to expand his business to Westchester and Rockland counties in New York, as he continues to see new work coming in from a newly designed website.
"As business comes back, we'll have to add people," he said. "I'm cautiously optimistic, but we're not just adding people without an absolute need to it."