For the last several months I’ve talked about our economy being in neutral and teetering on the brink of improvement or downturn. With results in for the July SurePayroll Small Business Scorecard in hand, I feel comfortable (but certainly not good) now declaring that we are out of neutral and sliding into reverse.
Small business hiring decreased 10 basis points from last month – the tenth month in a row of declining or flat hiring. That brings us to a year-to-date decrease in hiring of 2.4%. Average wages paid by small businesses also slipped, declining 20 basis points from last month. We’re now at a year-to-date decrease of 0.3%.
Metropolitan Statistical Area Data
Last month, SurePayroll began publishing data at the metropolitan level for the 35 largest metropolitan statistical areas (MSAs). Our intention is to allow small business owners who fail and succeed according to a more local economy to get a better idea of how their market is faring.
There are certainly positive stories in these numbers. For example, Orlando, Greensboro and St. Louis show strong year-to-date growth in hiring and pay, and continue on a positive growth trend in July. But overall the trend isn’t good. Month over month, more states had hiring and pay fall versus had them rise.
Small Business Owner Sentiment
However, none of the data slid deeper than Small Business Optimism, which has plummeted from 67% of business owners saying they feel optimistic about the economy in June to 47% in July.
That kind of sentiment is no surprise considering the roller coaster of a ride we’ve all taken this month as we’ve waited for the government to get on the same page – or at least sign the same page – regarding the debt ceiling. By this point, most people have seen the devastating effects that uncertainty takes on the economy. I don’t think anyone was more uncertain over the past few years as they have been over the past week.
But now that gridlock seems to be ending and we’re pretty sure we’ll have an answer about which direction we’re taking as it relates to our debt, maybe the economy’s back-pedaling will be slowed. In the meantime, I advise small business owners to plan for an economy driving in reverse, most likely longer than we’d all like. Hire only when absolutely necessary. Invest cautiously. And curtail spending…at least until the indicators point you act otherwise. While this perpetuates a cycle of a slow-to-recover economy, surviving this economy with healthy revenues is your number one goal.
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