Gallup polled small-business owners (value under $20M) about their expansion plans in early January, which for some strange reason didn’t get reported until today. Among those who do not plan to hire — 85% of the entire sample — almost half of all such businesses cited expected costs from health care coverage and government regulation:
U.S. small-business owners who aren’t hiring — 85% of those surveyed — are most likely to say the reasons they are not doing so include not needing additional employees; worries about weak business conditions, including revenues; cash flow; and the overall U.S. economy. Additionally, nearly half of small-business owners point to potential healthcare costs (48%) and government regulations (46%) as reasons. One in four are not hiring because they worry they may not be in business in 12 months.
Remember all of those hiring tax credits Obama included in his stimulus bill and in his proposals in the State of the Union speech? What kind of impact did they have on hiring plans among the 15% of businesses looking to expand? Not much:
Small-business owners who are currently hiring are most likely to say they are doing so because their business operations expanded, consumer or business demand increased, sales and revenues justify adding more employees, and they need to replace an employee who left. Thirteen percent of owners point to their ability to get new capital, while 7% indicate they were influenced by government tax incentives.
Seven percent of a subset of 15% think Obama’s economic plans have helped them. Forty-six percent of a subset of 85% think Obama’s regulations hurt them. What does that say about Obama’s policies? Small businesses are looking at this administration and seeing hostility and costly interference rather than a partner for long-term investment — and for very good reasons, one might add.
Respondents could choose multiple reasons in the survey, and the two most cited reasons for non-expansion are a lack of need for more employees and a lack of sales volume to justify hiring, which are of course related. Coming in a close third at 66% are worries over the status of the economy, which probably comes rationally from seeing the lack of demand that would allow these businesses to grow. Considering that small businesses of this class are the engine of job creation, this signals that we will not see any rapid expansion of employment in the near term, much as the CBO predicted last month. It’s a vote of no-confidence from the innovators and risk-takers that drive our economy.