Poll: 21% of Small Business Owners Will Cut Their Workforce in 2013

Dec. 13, 2012

(CNSNews.com) – A recent poll from the Wells Fargo/Gallup quarterly survey shows that U.S. small business owners are growing “increasingly pessimistic” as the new year approaches, finding that 21 percent of small business owners’ expect to decrease their workforces in the next 12 months to a level not seen since Aug. 2003.

Wells Fargo small business head Marc Bernstein attributed the potential decline in confidence in part to the possibility of going over the “fiscal cliff,” or the automatic tax hikes and defense cuts scheduled to occur if Congress and the White House do not reach a budget deal by the end of this month.

“Business owners who navigated through the Great Recession now face more uncharted territory created by ongoing uncertainty in Washington,” he said.

“These owners know that potential federal government spending cuts and tax changes can create a ripple effect, hitting the pocketbooks of consumers and reducing spending that could hit small businesses hard,” Bernstein added.

The Well Fargo/Gallup small business index survey, conducted Nov. 12-16, polled 607 random small business owners (those running companies that make $20 million per year or less) and asked “Over the next 12 months, do you expect the overall number of jobs or positions at your company to increase a lot, increase a little, stay the same, decrease a little, or decrease a lot?”

In the month of November alone, 21 percent of small business owners said they expect to decrease the number of jobs at their companies, the largest number in that category since Wells Fargo and Gallup began conducting the survey in Aug. 2003.

Meanwhile, 17 percent of small business owners said in November that they expect to increase their workforces in 2013, down three percent since July and the lowest since Nov. 2011.

Gallup noted that it is typical for the majority of small business owners to expect neither an increase nor a decrease in their workforce sizes, consistent with the results of the survey, which found that 61 percent of small business owners do not expect the number of workers they employ to change in 2013.

The survey analysis notes that six key factors were used to determine the outlook on small business hiring: financial situation, cash flow, revenues, capital spending allocation, hiring, and credit availability.

“Whether the pessimism of the nation's small-business owners is due to the fiscal cliff, Superstorm Sandy, the election, or some combination of these factors, Gallup said, “the U.S. economy remains weak and unemployment remains high from a historical perspective. A further sharp increase in small-business layoffs, resulting in higher unemployment on top of the current economic conditions, could turn today's slow growing U.S. economy into something worse.”

When CNSNews.com asked Small Business Administration spokesman Michael Stamler about the extent to which the unresolved fiscal cliff talks affected the results of the survey, “Stamler said it has “no mechanism that allows us to collect any reliable data on such questions.”

When asked if Americans should be concerned about these numbers, Stamler added, “I have nothing to add to this story.”