- The Washington Times - Wednesday, August 18, 2004

When the Labor Department announced that U.S. employers had created a meager 32,000 jobs during July, the news didn’t necessarily mean that the nation’s small businesses are going through an economic crisis.

Economists say that as far as many small companies go, the government’s data may not reflect reality; they say small businesses are increasingly inclined to add workers.

“They’re hiring,” said William Dunkelberg, chief economist with the National Federation of Independent Business, a Washington advocacy group. He said the NFIB’s latest survey of its members, taken last month, found that “their hiring plans improved even more.”

And a small, unscientific sampling of small-business owners this week found they are indeed hiring — or, if they are not, it isn’t always because of economic weakness.

At Accurate Manufactured Products Group, “business for us is still very strong” despite the soft patch the economy went through during the spring, said Matt Goldberg, president of the Indianapolis-based company.

The company, which moved this year from New York, has expanded to 20 employees from 11. It not only replaced workers who didn’t transfer with the company, but also created new positions as sales increased.

And, Mr. Goldberg said, “we expect to add more.”

Many small companies go about the hiring process in an extremely deliberate fashion, waiting to take on new employees until their business justifies the expansion. That’s a very different approach from companies that might hire in anticipation of better times.

“I am probably one of the cheapest, slowest people to hire in the world,” said Clint Greenleaf, chief executive officer of Austin, Texas-based Greenleaf Book Group. But with his business growing, he is adding four staffers to his payroll of 10.

Mr. Greenleaf said sales at the book publisher and distributor grew more than 100 percent last year, and 2004 is also expected to be strong.

“Our growth has been such that I haven’t seen a bad economy,” he said. “That said, [the weak economy] probably adds to my level of cautiousness. … I don’t want to be in a position to fire someone.”

Herz Financial, which specializes in estate planning for wealthy people, has no plans to add staff at its offices in Farmington, Conn., or Boca Raton, Fla. Senior Vice President Randy Herz said this reflects a prudent attitude toward hiring, not a slowdown in business.

Mr. Herz said the company would rather invest more in technology to make itself efficient than in new employees. So it’s more likely to buy a $20,000 piece of labor-saving equipment than hire a $45,000-a-year worker.

In expanding a staff, “you have all the headaches of hiring, firing, employment issues, management, training,” he said. This strategy grew out of experience, Mr. Herz said. In 1999, Herz Financial increased its staff and, in the end, found it didn’t help the business.

For some companies, there are issues beyond a difficult economy that affect hiring decisions.

At PR Farms, a Clovis, Calif., fruit grower, state regulations are making it hard to add to a 250-person staff, Manager Pat Ricchiuti said.

One of Mr. Ricchiuti’s concerns is the state workers’ compensation insurance rates. Although rates have fallen an average 10.38 percent because of laws passed since Gov. Arnold Schwarzenegger took office, they are still quite high — having risen an average 149 percent from 2000 to 2003, according to the state Department of Insurance.

Mr. Ricchiuti said it makes more economic sense to pay workers overtime than to hire more employees and have additional workers’ compensation costs.

He also said the state’s minimum wage — currently $6.75 an hour, compared with the federal minimum of $5.15 — makes his company’s peaches, plums, grapes and other fruit less competitive than those produced in other states. A bill now making its way through the California Legislature would raise the wage to $7.75 by Jan. 1, 2006.

Mr. Ricchiuti said the combination of these and other regulations have made it hard to turn a profit.


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