Small businesses still reeling - Your Life - trends in hiring of new employees by small business enterprises - Industry Overview

USA Today (Society for the Advancement of Education), March, 2004

After falling to a record low at the end of 2003, small business hiring may be poised to rebound, but attracting the best candidates could be far more difficult than it was following the 1990-91 recession. Moreover, the number of job seekers recruited by companies with 500 or fewer employees has fallen 25% since 1999.

"What is so surprising is that we are more than two years into the recovery and small business hiring has continued to decline. This is a major reversal from the last recovery when [they] began adding workers almost immediately. Nearly 70% of unemployed executives and managers went to small companies between 1991 and 1994," notes John A. Challenger, chief executive officer of the global outplacement firm Challenger, Gray & Christmas, Inc., Chicago, Ill.

The firm's survey of 3,000 discharged executives and managers reveals that among those winning new jobs, 50% went to small enterprises--the lowest percentage recorded since 1990. In 1999, prior to the recession, the average was 67%. The annual average has declined each year since.

"The good news is that the [2003 last-quarter] figure may represent the bottom of the trough. There have been several indications that small businesses are getting ready to add workers," says Challenger. "However, [these] owners may find that attracting experienced managers and executives is not as easy as it once was. During the dot.com boom, it seemed that everyone was leaving large employers for small entrepreneurial ventures, but things have changed.

"After such a prolonged jobless recovery--more than a year longer than the one our economy experienced after the 1991 recession--many of the nation's unemployed simply want some job stability. Rightly or wrongly, they may conclude that small businesses cannot offer the level of job security they desire. The other issue weighing heavily on their minds is the skyrocketing cost of healthcare. Job seekers are likely to have doubts about their chances of securing health benefits at smaller companies."

Sixty percent of the 43,000,000 Americans with no health insurance are small business owners and their dependents, or small business employees and their dependents, according to the National Federation of Independent Business.