Economic Uncertainty Continues to Hinder Small Business
BY Michael Alter
The SurePayroll survey finds optimism among this normally-optimistic group continues to stall.
A couple of months ago when you were coping with the looming fiscal cliff, you probably at least thought you would have some clarity when it was over. Whatever the outcome, small business owners would know the direction the country was heading and plan accordingly. However, with the fiscal cliff behind you, and March starting tomorrow, you're probably feeling an even greater wave of uncertainty. Almost a tidal wave.
Economic conditions in Europe are unsettling, with Italy's recent struggles and the downgrade of British debt. Meanwhile, constant talk of the sequester and spending cuts here in the U.S. only add to that edge.
No wonder the SurePayroll survey shows that small business owners continue to employ fewer people and growth has slowed.
In February, the SurePayroll Small Business Scorecard found hiring among more than 40,000 small business owners was down slightly (0.1 percent), as it was in January, and paychecks were up (0.1 percent), likely due to existing employees working longer hours or getting overtime pay. Optimism among small business owners remained virtually unchanged at 59 percent.
Considering the inaction in Congress, it's hard to see much changing in the near future. In order to spur growth, Congress needs to focus on policies that generate demand.
Focusing on the minimum wage, for instance, isn't going to do it. As part of the survey, SurePayroll asked small business owners about the proposal to raise the minimum wage to $9 per hour. While 58 percent of small business owners said they support raising the minimum wage, 71 percent said the states should set it, and 77 percent said they already pay their employees more than the minimum wage.
What's probably more on the minds of small business owners is that the sequester is going to take money out of the economy. Economists will argue back and forth on the affect these spending cuts will have, but at the end of the day, the conversation generates the same uncertainty as at the end of 2012.
The ways forward are just not clear. It's not a surprise that small business owners continue to play it close to the vest.
MICHAEL ALTER is president of SurePayroll, America’s leading online payroll service. He received an MBA from the Harvard Business School and holds a bachelor's degree in economics from Northwestern University. @michaelalter