Many Businesses Still Hesitant to Hire

There is growing pressure on U.S. companies to hire more employees. Many CEOs are taking a wait and see attitude [...]

December 6 2010 by Ceo Briefing - Dec. 7 2010


There is growing pressure on U.S. companies to hire more employees. Many CEOs are taking a wait and see attitude with the Republicans soon in charge of the House of Representatives, and speculation on whether costly regulations will be unraveled. But even with that delay, U.S. small businesses continued to hire in November, this time adding the most jobs in a month’s time in nearly three years, according to payroll company Automatic Data Processing Inc. Overall, job growth remains modest compared with prerecession years, and many entrepreneurs – who run smaller companies – say they plan to hold back for some time to come.

A number of factors—including pending tax legislation, the ongoing credit crunch, and changes that owners made during the recession to stay afloat—are contributing to entrepreneurs’ restrained approach to hiring, according to The Wall Street Journal.Small businesses play a major role in the U.S. economy, employing half of all private-sector workers, according to the U.S. Small Business Administration. They have also historically started adding jobs more quickly after recessions than large companies.Within the small-business community in general, older, established companies tend to do less hiring than young companies. Some small-business owners are hiring cautiously because they lack sufficient sources of funding. For start-ups, these include such tapped-out options as home-equity loans and credit cards. And for established companies, bank loans remain sparse.

There are also some businesses that are unable to increase their headcounts simply because they took up smaller office spaces after shedding workers during the recession.For now, many business owners are making ends meet with fewer helping hands through a variety of strategies, including outsourcing tasks to freelancers.

For more from The Wall Street Journal about the hiring outlook, please click here.