Small Business Helping to Improve the Economy

As larger corporation pull back on hiring new employees during these times of economic uncertainty, small businesses are beginning to hire more, helping to create the majority of new jobs. Although many economists believe that the labor market growth with slow throughout the year, it is possible for smaller businesses with 50 employees or less to help keep the market relatively stable. Recent employment reports from the Labor Department are continuing to show a decrease in the addition of new jobs.

According to reports put forth by the National Federation of Independent Business, or NFIB, small businesses added an average of 0.18 workers per firm during March of this year. This is one of the best readings that NFIB has reported in the last 10 years. In addition to this great news for employment numbers, 24 percent of the small businesses recently surveyed are planning to add more workers, while only four perecent are planning to make cuts to their work force. Early in the recovery of the recession, big businesses were rapidly hiring, but small businesses are now helping to support and improve the economy.

Mark Zandi, Moody Analytics’ chief economic officer, says “I think small businesses will account for a larger share of the job growth this year than at any time since before the recession.” Zandi also believes that small businesses will contribute to well over half of all employment gains for 2015.  According to reports put out by the Labor Department, the creation of new positions is down almost 140,000 jobs from February to March, but Bill Dunkelberg of NFIB doesn’t believe these decreases will last long.

Dunkelberg, the chief economic officer of the National Federation of Independent Business, expects these surprisingly weak new job totals to beef up in coming months, especially since the reports from the Labor Department do not always fully capture the hiring patterns of small businesses. Another factor to take into account is the increasing approval for small business loans – banks approved almost 22 percent of small business loan applications in February, which is a significant increase in the post-recession.

One company that is taking full advantage of the improved situations for small businesses is Method Savvy, located in Durham, NC. This 16 employee business has added three fulltime employees in the first quarter alone and plans to add up to 10 more positions throughout the year. CEO Jake Finkelstein attributes the additional hiring to the 60 percent revenue growth the business will see in the coming year. “A lot of companies we work with are more willing to take a calculated risk,” says Finkelstein.

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*Photo Courtesy of Simon Cunningham via Creative Commons License