Small Business Hiring Sees Uptick in 2007

While there is a lot of gloom and doom about the state of the nation's economy, new data released Friday by one of the nation's largest payroll providers show that there were some bright spots for small businesses in 2007.

SurePayroll analyzed payroll data for more than 18,000 small firms to estimate their performance last year. The good news for small firms is that hiring increased 4.3 percent, compared to a 0.2 percent decline in 2006.

On a regional basis, small business hiring saw the greatest increase in the West with a 6.2 percent increase. Salaries saw the greatest jump in the Midwest but a 0.4 percent decline in the Northeast.

The group closely tracks a group of 21 "benchmark" states and only two - Maryland, which was down 3 percent, and Michigan, which fell 0.6 percent, experienced a downturn in hiring in 2007.

Salaries were up in 17 of those 21 states, but Maryland ticked downward at 0.05 percent. Faring far worse was Indiana, which dropped a significant 8 percent and New York, which fell 6.2 percent.

In the company's survey of small business owners, nearly 81 percent said they were not hiring new employees in December, 10.4 percent were hiring new employees and the remaining 9 percent said they were downsizing.

Additionally, there was an increase in the number of business owners who said they would be able to pay less for an employee in 2007 than in 2006. According to SurePayroll President Michael Alter, that's a good thing because "generally speaking, if you have to pay employees more, you have to charge customers more."

Other interesting findings from the study show that small businesses relied more on independent contractors in 2007, which Alter said is "to be expected -- when there is economic uncertainty, small business owners shift from hiring full-time equivalents to hiring more part-timers and more independent contractors."

By Sharon McLoone |  January 6, 2008; 8:00 AM ET Data Points
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Please email us to report offensive comments.

Do we know what kind of employees are being hired? Does more part-timers mean less skilled labor jobs?

Posted by: Austin, CEO and Co-Founder of | January 9, 2008 11:42 PM

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