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The Honolulu Advertiser
Posted on: Wednesday, April 23, 2003

Chances of being hired by small businesses very slim

By Jim Hopkins
USA Today

SAN FRANCISCO — Small-company hiring, which was expected to rebound, instead grew worse last month amid war and economic jitters.

Just 1 percent of 555 firms surveyed say they plan to add workers — down from 6 percent in February, the National Federation of Independent Business (NFIB) trade group said today. The last time it hit 1 percent was in December 1991.

The darker sentiment reflects skittish business and consumer confidence, which hit lows in March as the United States readied for war, says Mark Zandi, chief economist at Economy.com.

The mood of the nation's 5.8 million small employers is vital to economic growth because they create most new jobs. They also spend billions for machinery, computers and other equipment. The NFIB report follows a forecast by the Business Roundtable, which represents big corporations, showing that just 9 percent of members plan to add jobs in the next six months. Another 46 percent expect no change; 45 percent plan cuts.

Why small firms aren't hiring:

• Shifting priorities. In Eagle, Colo., NexGen Constructors may invest in equipment to lay roads and sewer lines before it adds to its 27 workers. Even that hinges partly on passage of President Bush's economic plan, which includes faster write-offs for such spending by small companies, says Chief Financial Officer Edward Woodland.

• Travel jitters. In Gardiner, N.Y., north of New York City, slackening demand for business conferences is pinching revenue at corporate event planner Fody Associates. Owner Ann Fody says more companies are teleconferencing because of terrorism fears and worries about severe acute respiratory syndrome, or SARS.

Teleconferencing "is the biggest competitor now to the meeting industry," Fody says. "They don't want them (employees) traveling."

• Corporate cutbacks. In Indiana and southern Michigan, customers in the automotive and retail industries are holding off on heating and ventilation improvements, says Schuster Mechanical in South Bend, Ind. "Things that are planned to go have been put on the back burner," says Laurie Schuster, president of the company, begun in 1994. "This is probably the slowest time period that we've seen."

Zandi says small-company hiring could show some improvement now that much of the major fighting in Iraq is over. "But it would still paint a picture of a very weak, struggling job market."

Employers, before adding to payrolls, first will build inventory, resume advertising and then invest in machinery, Zandi says — and that assumes the war doesn't take a turn for the worse and that there are no terrorist threats or attacks within the United States.