Small Business Optimism Up Significantly

With small biz optimism taking an upswing, will hiring and wage increases follow?
Business Writers
November 09, 2011

Small business optimism more than doubled in October, according to the monthly Small Business Scorecard by online payroll service SurePayroll.

The company has been compiling the monthly data from over 33,000 very small businesses–they have an average of seven employees—monthly since September, 2004.

The optimism has not stretched to hiring, though. Nationally, hiring decreased for the 13th month in a row, with a 2.9 percent year-to-date dip.

Wages are considered flat: They are down slightly (0.6 percent) for the year. Broken down by region, wages are up slightly in the South and Northeast but down in the Midwest and the West.

“Optimism is like the fuel that drives small business," said SurePayroll president Michael Alter. “With small business optimism taking such a strong upswing, we can be hopeful that hiring and wage trends may follow. While hiring is down, a closer look at the numbers shows the decline is slowing."

Alter pointed out that wages actually are up a bit from this time last year.

“That, coupled with rising optimism, makes me think next month may be even brighter for small business,” he said. For the seventh month in a row, the South was the only area of the country showing even tiny gains in hiring–it's up 0.5 percent year-to-date. The rest of the country is all negative.

Microbusinesses are also continuing to rely on contractors to fill in the gaps: Contractor use showed a month-over-month increase of 1.3 percent.

By city–SurePayroll shows data for 35 metropolitan areas–Sacramento showed the biggest losses in hiring, which was down 13.9 percent. Cincinnati followed, down by 12.2 percent. The biggest gains: Orlando (up 6.2 percent) and San Antonio (up 6 percent). The biggest losers on wages: Indianapolis (down 12.2 percent) and Columbus, Ohio (9.2 percent). St. Louis and Philadelphia had the largest gains, with 8.6 percent and 6.5 percent, respectively.

The company's survey of micro-business owners found that they are focused on long-term growth–and that the current administration and presidential candidates should be, too.

More than half (51 percent) said the most critical issues related to job growth are balancing the budget, reducing the deficit and stabilizing the housing market.

They're divided on the flat tax. Nearly half (45 percent) think it would have a positive impact on hiring, while 44 percent say it would have zero impact. Eleven percent thought it could have a negative impact. (Read more on the economy.)

What's your economic outlook? Are you more or less optimistic than you were last month?