Small business optimism at a dangerous low
A trade group said this week that small business optimism dropped slightly in May, the third monthly drop in a row Lower optimism almost certainly means fewer hires.
CBS News correspondent Seth Doane reports that the news is yet another sign that any economic "recovery" might be slowing. The trade groups report, done by a group representing 350,000 small businesses, showed that more small businesses say they are planning to shrink their payrolls, rather than expand them.
Small businesses like "Shade Tree Garage" in Morristown, N.J., are usually engines of job growth - because it's businesses just like these that are employing half of all private-sector workers in the U.S. Owner John O'Conner's struggles, however, are exemplary of the problems small businesses all over America are facing.
"I'd hoped by now to have four additional (workers) by now; Three technicians and one advisor up front.," O'Conner said. "I don't' anticipate being able to do that until next spring."
O'Conner doubled the size of his shop in 2008 on a hunch that the recession would force folks to fix their old cars rather than buy new ones. However, customers are even more frugal than he'd imagined.
"We'll tell them their breaks are getting thin, and they'll say, 'Can I get another month?' They'll literally want to go another pay period until they do their breaks," O'Conner said.
The National Federation of Independent Businesses, or NFIB, a trade group which represents companies like "Shade Tree Garage," found that, for the last three months, these companies reported decreased optimism, which reflects "mood," and that impacts hiring.
"We do expect that when jobs are created it will come from the small business sector - but in the near future our data indicates that we can't look to them for job growth," said Jean Card, vice president of media and communications for NFIB.
The federation's May report revealed small companies have the worst hiring outlook in 8 months. O'Conner agrees, saying business is stagnent all around town.
"Whether I talk with Jason at the coffee shop, other independent repair shops, it's if we're flat we're almost happy," O'Conner said.
His ten workers have a 401k plan and healthcare benefits, but O'Conner's healthcare costs alone were up more than 20 percent last year.
"Every bill I get has gone up, and I know that's true with the individual consumer," O'Conner said.
O'Conner has even dipped into his personal savings, but remains optimistic to some degree.
"The good news is we're not out of business...there is always an upside," O'Conner said.
For an economy in need a jump-start, small businesses may not be a quick-fix.
