Region Shows Dip in Small Business Growth

A dearth of highly skilled workers in Maryland and Virginia may be hurting the area's small business growth, according to new data from payroll provider SurePayroll.

The company reported Monday that the small business economy continues to expand across the nation, with June marking the seventh straight month of growth. But data available for Maryland and Virginia show a different trend.

By the end of June, small business hiring increased 2.2 percent; small firms' hiring is on track to grow 4.5 percent in 2007, according SurePayroll. For all of 2006, small business hiring declined 0.2 percent.

The payroll provider uses data gleaned from all 50 states, but focuses on 21 states, including Maryland and Virginia, that it considers "benchmark states." It chose those states because the firm has significant in-depth data on them. It does not publish data on Washington, D.C.

Firms increased in size in 18 of SurePayroll's benchmark states as of the end of June. Three states -- Indiana, Virginia and Michigan -- experienced a drop in hiring. In Virginia, the number of employees declined 0.6 percent while the average paycheck in the state increased 3.4 percent. In Maryland, the number of employees increased 0.6 percent this year, but the average paycheck declined 0.3 percent.

"In Virginia and Maryland you don't see a huge change, but it's more of a question of supply and demand," said SurePayroll President Michael Alter. "The differences in Virginia and Maryland show they don't seem to be growing as well as the rest of the country. It has a lot to do with the type of labor that those regions need to grow and the availability."

Alter said that he suspects there's a greater demand for highly skilled workers like engineers in the Washington-metropolitan area than in many other states and there's just not enough supply of these workers.

The firm also reported that salaries this year have declined most dramatically in New York while Nevada has boasted the most robust salary growth levels.

Separately, the National Federation of Independent Business released data Tuesday morning showing that "usually optimistic" small business owners are expressing concern about the nation's economy. The group's Small-Business Optimism Index lost 1.2 points in June, falling to 96. It has been below its historical average of 100.2 points for 15 of the last 16 months and below 100 for all of 2007.

By Sharon McLoone |  July 10, 2007; 12:02 PM ET Data Points
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Comments

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Maybe the explosive growth is federal contracting isn't feeding the area's small businesses. That makes me think of the scam where a small business applies for a federal contracting job in concert with a large company, thereby qualifying for preferential treatment as a small business, but the large company gets most of the benefit.

Posted by: Bob Piersma | July 10, 2007 10:52 PM

Hey Bob at least the small company gets a past performance reference. Doing business with the gov't is tricky and small businesses who aren't set up specifically to do business with the gov't need to be careful.

Posted by: congovman | July 11, 2007 4:56 PM

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