Wed., July 14, 2010 3:17pm (EDT)

Sluggish Hiring In Small Businesses Causes Worry
By Tamara Keith
Updated: 4 years ago

Ask John Brinson why he isn't hiring, and the answer is surprisingly simple.

"We don't need new employees," says Brinson, who owns four fitness centers in Pennsylvania's Lehigh Valley. "You don't hire people just to hire people. You hire them because you need them, and we don't need them because business is not good enough."

By the numbers, the economy is in the midst of a recovery. Yet, millions of jobless Americans still aren't feeling the uptick. The U.S. Chamber of Commerce is holding a summit Wednesday to talk about creating more jobs. The chamber has been critical of Obama administration policies, saying they hurt business.

Feeling The Burn Of The Economy

Two years ago, Brinson's fitness business was booming. Then Lehman Brothers failed, the entire financial system teetered on collapse and the trouble reached all the way to Allentown, Pa.

"The bottom fell out," Brinson says. "People got scared."

And some canceled their memberships. 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 like to restore their wages, and he says he will do that before adding new positions.

"What we're selling, which is fitness, most people do not consider essential," Brinson says. "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."

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 is not a good sign for the recovery since these small businesses create the majority of new jobs.

Customers Reluctant To Spend

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 remodeling. 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 people working for him. Now he has just two.

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

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

"This is different," Rush says. "I've never seen people so reluctant to spend money. My customers are like the stock market. They don't like uncertainty."

And as far as Rush is concerned, uncertainty is at an all-time high. "We live in very uncertain times," Rush says. "I mean, there's all this stuff going on in Washington, and people don't know what's going to happen."

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

"I worry tremendously about that," Rush says.

Rush says it doesn't look like he will have enough work to bring on another employee anytime soon. Maybe in a year or two. [Copyright 2010 National Public Radio]