Business Survey Indicates Limited Hiring Over Next 12 Months

May 12,2016

NEW YORK— Bank of America's 2016 survey of small-business owners indicates there is widespread uncertainty and anxiety about the country's economic future, with some business owners citing concern over economic policy statements made by the leading presidential candidates.

Small businesses account for a significant part of America's economic activity.

Confidence by the owners of these stores and factories is down as election year anxiety rises, according to a Bank of America's survey.

“The election is really important because small-business owners walk a very fine line around profitability and if you think about what some of the biggest expenses can be for a small-business owner, it can be taxes, it can be the minimum wage that can have a huge impact, and health care costs,” said Sue Lonergan, a Bank of America executive.

'Make or break'

"When you think about those three items, it could actually make or break a business," Lonergan said.

The call by both the leading Republican and Democratic presidential candidates to increase the minimum wage is especially worrisome for small businesses, which are defined as companies having 100 employees or less.

Steve Hong, who owns a garment factory in Manhattan, opposes the city's mandate to raise the minimum wage to $15 an hour by the end of 2018.

“I tried to give my workers a little bit of a raise every single year and most of my workers average between $11 and $13 [per hour] and that’s probably, in this industry, one of the higher ones," Hong said.

"But now with the new law of $15 an hour minimum, you’re raising the minimum from $8.75 to $15 in three years, which is 80 percent. I don’t know how to sustain that," he said.

Health care costs

Nearly three-quarters of small-business owners also worry about rising health care costs. In fact, the survey shows 22 percent said they are postponing hiring new employees, citing uncertainty regarding the election and health care policy.

Chief Economist Tara Sinclair of the employment search engine said radically different policies from the left and right create challenges for business.

“I do think that employers are really struggling to get a sense of how to make their hiring plans for the long term in the current political environment because they are hearing very different economic policies and that makes it more challenging than any specific policy. It’s not knowing what the policy will be,” Sinclair said.