The US economy has gained momentum but the small business employment is still lagging behind other drivers of the economic recovery. The past rebounds happened for companies having fewer than 500 hundred employees. Some of the owners that after a wait of over a year they are now going to push their employees to be more productive and will also look for part timers.
In the face of uncertainties, businesses are not very sure whether they will ever be able to revive the full employment situation that was existent in the past. Small businesses are found to have added 81,000 workers in last 12 months after the recession got over. Companies have reduced about 480,000 employees now as compared to a previous time period. “Normally we look to small firms to account for a lot of the job growth,” conveys Scott Brown, chief economist, Raymond James & Associates, St. Petersburg, Fla.
Investors are now rewarding the small business efficiencies so as to battle the recession. The Wilshire Micro-Cap Exchange Traded Fund includes companies having fewer than 500 workers and it tracks shares of Wilshire Index’s 2,500 smallest stocks. This has gained 33 percent vs. 19 percent for Standard & Poor’s 500 ETF Trust.
Small businesses have cut costs by reducing workforce. This may be good for efficiency but it is not same for managing the unemployment rate. In November, unemployment rate is stuck at 17 percent. This included people without jobs, those that gave up searching and those who want full time jobs and are currently working as part-timers. Many of businesses are in trouble in terms of paying the bills even though they are still working.
The recession definitely has brought in a pause as some small businesses even fired their employees. Then businesses have also cut costs on benefits, trash removal, office lease, payroll taxes, and electricity bills and so on.
This article was submitted by Rohit Arora, co-founder of Biz2Credit. Biz2Credit is a small business marketplace that connects entrepreneurs with financing options and advice to grow their business. Send all questions to