A Wells Fargo/Gallup small business survey published last month gives sober news about the job market, as reported in the Wall Street Journal. Large companies have hired virtually zero net new workers in this economy, and what few jobs that the U.S. has gained have been almost exclusively from small businesses.
This latest Gallup survey indicates that’s about to change.
21% of small businesses plan to cut payrolls, and only 17% plan to hire more workers. The rest plan to remain unchanged. This indicates a net loss of employees at small businesses. A negative reading like this typically indicates massive layoffs on the horizon, according to the WSJ report.
This survey was done right about election time so business owners were unsure about Obamacare. Now that they know it’s a done deal they are likely to hire even fewer workers.
Factor in the general consensus in Washington that taxes will go up on top wage earners, many of whom are small business owners, and you can expect a further reduction in hiring after the new year.
Then there’s the whole fiscal cliff drama in DC. Lost in all the static is sequestration. It’s pretty much a given now that sequestration will in fact kick in on March 1st. Some estimate this will result in job losses in the millions.
Nobody knows for sure what the numbers will be because the White House forbade defense contractors giving the usual 60-day notice of layoffs. Instead of a trickle of announcements there will be an avalanche. That means large businesses will reduce their workforces.
The other half of sequestration hits the federal government. Every agency will have a 6% decrease in funding, most of which will be resolved by laying off workers, including active duty military personnel.
There’s little the Fed can do to help, and the federal government is out of money, too. As Redd Foxx used to say, “This is the big one.”
