NEW YORK (AP) — Alan Gaynor's architectural design firm in New York isn't hiring because his real estate developer clients are uneasy about starting projects in an uncertain economy.
"It's a wait-and-see attitude they have. Everyone's a little nervous. The economy's growing a lot slower than anyone would have liked," says Gaynor, founder of Alan Gaynor & Co. He has 15 employees, the same as a year ago.
Gaynor's company is one of the many small businesses not hiring or expanding. A reluctance to take chances when the economy seems to be stalling contributed to smaller-than-expected growth in new jobs last month. The Labor Department said Friday that only 69,000 jobs were created in May, the smallest number in a year. But small business owners offer explanations that go beyond the economy's current weakness. Some say government budget cuts are to blame. Others argue that a lack of qualified applicants is making it difficult for them to hire. And still some are having trouble getting the loans they need to expand — a vestige of the 2008 financial crisis.
Gaynor says his clients are concerned about gridlock in Congress, the upcoming U.S. presidential election and the slowing economies in China and India. One client has been on the verge of starting a $30 million project in Manhattan. "They have been ready to pull the trigger for six months or longer -- but they're not doing it," Gaynor says.
The economy has been one factor in Alice Lerman's decision not to expand the staff of her Chicago-area pet supplies store, Barker and Meowsky. She hires only when one of her seven full-time and five part-time staffers leave.
"We really don't know exactly what's going to happen," Lerman says. "We can't affect what's going on in the outside, but we can affect what's going on internally."
But she says her decision not to hire also results from the fact she has been changing her store's culture to focus more on services that big-box pet supplies stores don't provide. She is also trying to offer better prices than the big stores do. Not only has she not raised her prices, she has lowered some of them. Not hiring makes that easier to do.
Caring Senior Service is hiring, but not at the rate it expected, says CEO Jeff Salter. One reason is the high unemployment rate itself — people without jobs are taking over caregiving for their elderly and sick relatives, and that reduces demand for home care help across his industry.
It's also difficult for his company, which is headquartered in San Antonio, Texas, to find skilled applicants for some jobs. Salter currently has openings for directors of five of his 42 locations in 12 states, twice the usual number. And it's taking about six weeks, twice the usual time, to fill those positions.
"Hiring has been surprisingly getting tougher in the last six to eight months," he says.
High-tech small businesses reported similar problems. At NextDocs, a software maker in King of Prussia, Pa., "our challenge is hiring the quality and type of people we are looking for," says CEO Zikria Syed. NextDocs creates software to help companies comply with government regulations. Syed says, "people in America are not giving the energy and focus to science and technology and computers that are needed." He has 50 positions open now, and a staff of 140. He hopes to double his staff this year.
Other businesses cite tight credit — and a new report backs that up. A study released Friday by PayNet, a research firm that tracks loans to small business, shows that lending fell 2 percent in April after a 3 percent drop in March. Dun & Bradstreet Credibility Corp., a credit reporting service for businesses, has also reported a slowdown in lending to small businesses. The company and Pepperdine University surveyed nearly 6,000 companies during the first quarter. Among businesses with revenue under $5 million, 64 percent said difficulty in getting financing has limited their ability to grow. Fifty-five percent said that was restricting their hiring plans.
Robert Stewart Inc., a 93-year-old New Jersey company that makes neckties, wants to add five or six workers to its staff of 18, and business is up, says Steven Wishnew, the company's operations director. But the company can't get the $50,000 to $100,000 in credit that would "kick-start our engine," he says, and sellers that used to give them 90 days to pay now demand payment in advance. The bank wants the company's owners to put up their homes as collateral for a loan or line of credit, he says.
"You have to be insane to do that," Wishnew says. "Who knows where this economy is going?"
Government spending is the problem for Tom Brown's road construction firm, Sierra Pacific West. Almost all his business comes from the federal and local governments. With government budget cutbacks, his business is down 20 percent from a year ago and he's not hiring. The staff of his Vista, Calif., firm is below 100, down from 150 before the recession.
Brown says he's blessed to have the work he does but "now the question is: do the agencies start getting funding of some sort to provide new work?" He says it would take Congress passing a new highway building appropriations bill covering the next five years for him to feel secure about expanding.
Layoffs are still a possibility at another road firm, Ranger Construction, based in West Palm Beach, Fla. The company has been hit hard not just by government budget cuts, but a drop in spending on roads by homeowners associations and companies, says executive vice president Bob Schafer.
Ranger had 1,200 workers before the recession and now has fewer than 550. The company is now almost completely dependent on the Florida Department of Transportation for its business. And if the state cuts its spending, Ranger will have to cut back more, Schafer says.
But, he also says, "if we were to get a job of any significance, we'd have to hire."
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AP Economics Writer Paul Wiseman contributed from Washington.
Joyce Rosenberg can be reached at http://twitter.com/joycemrosenberg
