Prolonged uncertainty about the trajectory economy and the looming combination of tax increases and spending cuts are hampering small businesses from hiring.
Only 16 percent of small business owners reported that they plan to add employees this year and the majority expects to hold off hiring into 2013, according to a U.S. Chamber of Commerce third quarter survey of small businesses released Wednesday.
“Continued uncertainty is the greatest threat to small businesses and our country’s economic recovery,” said Thomas Donohue, president and chief executive of the U.S. Chamber.
“We can help reverse this downward trend by addressing the fiscal cliff, promoting sensible regulations, and providing a clear road map for growth,” he said.
Small businesses are concerned about congressional inaction on fiscal cliff issues, with 62 percent saying the expiration of the 2001 and 2003 tax rates, coupled with scheduled spending cuts will negatively affect their business’s growth, up slightly from 59 percent in the second quarter.
All told, 89 percent say believe these tax increases will hurt their firms.
The fiscal cliff, the nation’s regulatory environment and the healthcare law are the top concerns when considering whether to ramp up hiring.
As the end of the year rapidly approaching, businesses are growing more concerned about what will happen.
Congress is expected to work on a solution, most likely a short-term answer, to put off expiring tax provisions and spending cuts until next year after returning to Washington after the elections.
That has led 49 percent of small businesses to respond that they are not sure if their best days are ahead or behind them, with 84 percent pessimistic about their future operations in light of recent unemployment numbers and low workforce participation.
Only 17 percent of small businesses surveyed expect to add staff in next year.
The survey was conducted online between Sept. 20-27, among 1,391 small business executives.
Source: The Hill