Sluggish Hiring In Small Businesses Causes Worry In past economic recoveries, small businesses generated much of the job growth. But this time around, hiring at small firms is lagging. What does that mean for the recovery?
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Sluggish Hiring In Small Businesses Causes Worry

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Sluggish Hiring In Small Businesses Causes Worry

Sluggish Hiring In Small Businesses Causes Worry

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RENEE MONTAGNE, Host:

NPR's Tamara Keith tracked down a couple of small business owners to ask them why they aren't hiring.

TAMARA KEITH: Ask John Brinson why he isn't adding employees, and the answer is surprisingly simple.

JOHN BRINSON: We don't need new employees.

KEITH: And why doesn't he need them?

BRINSON: You don't hire people just to hire people. You know, you hire them because you need them, and we don't need them because business is not good enough.

KEITH: Brinson is in the fitness business. He owns four clubs in Pennsylvania's Lehigh Valley. Two years ago, Brinson's business was booming. Then Lehman Brothers failed. The entire financial system teetered on collapse, and the trouble reached all the way to Allentown, Pennsylvania.

BRINSON: The bottom fell out. People got scared.

KEITH: And some cancelled their membership. Brinson's business is down 20 percent. But instead of letting employees go, he got them all to agree to a 10 percent pay cut. He'd liked to restore their wages, and he says he'll do that before adding new positions.

BRINSON: What we're selling, which is fitness, most people do not consider essential. Other things come first. So they're not going to buy from us until the economy gets better. So we're just hanging on and hoping it's going to get better.

KEITH: A recent survey from the National Federation of Independent Business backs this up. According to the trade group, owners of small businesses say weak sales are their biggest problem. Few have any plans to hire in coming months, and that's not a good sign for the recovery, since these small businesses create the majority of new jobs.

(SOUNDBITE OF BANGING)

KEITH: Brooke Rush is coated in a mix of sweat and sawdust. He owns a construction company in southeastern Pennsylvania that specializes in custom homes and remodels. This job is a big one, replacing a roof. But he hasn't built a custom home in three years. In better times, he'd have four or five guys working for him. Now he has just two.

BROOKE RUSH: The work just wasn't there, and I didn't see it coming. The calls had dropped off, so the phones weren't ringing. Sometimes we'd just call ourselves just to make sure the phones are still working.

KEITH: Rush has been in this business for 32 years, so he's been through recessions before.

RUSH: This is different. I've never seen people so reluctant to spend money. My customers, they're like the stock market. They don't like uncertainty.

KEITH: And as far as Rush is concerned, uncertainty is at an all-time high.

RUSH: The real issue is just the psychology, it's just being uncertain. We live in very uncertain times. I mean, there's all this stuff going on in Washington. It's just - and people don't know what's going to happen.

KEITH: His list of concerns include health care reform and the Bush-era tax breaks that are set to expire later this year.

RUSH: I worry tremendously about that.

KEITH: Tamara Keith, NPR News, Washington.

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