Small Businesses falling apart by the seams

From the New York Times:

In the latest sign that the economic recovery may have lost whatever modest oomph it had, more small businesses say that they are planning to shrink their payrolls than say they want to expand them.

That is according to a new report released Tuesday by the National Federation of Independent Business, a trade group that regularly surveys its membership of small businesses across America.

The federation’s report for May showed the worst hiring prospects in eight months. The finding provides a glimpse into the pessimism of the nation’s small firms as they put together their budgets for the coming season, and depicts a more gloomy outlook than other recent (if equally lackluster) economic indicators because this one is forward-looking...

Many small businesses, which employ half of the country’s private sector workers, are still struggling to break even. And if the nation’s small companies plan to further delay hiring — or, worse, return to laying off workers, as they now hint they might — there is little hope that the nation’s 14 million idle workers will find gainful employment soon.

“Never in the 37-year history of our company have we seen anything at all like this,” said Frank W. Goodnight, president of Diversified Graphics, a publishing company in Salisbury, N.C. He says there is “no chance” he will hire more workers in the months ahead.

“We’re being squeezed on all sides,” he says...

The unemployment rate has been stubbornly high in the last year, primarily because companies have stopped hiring, not laying off more workers. Although layoffs were at a record low in April, the latest monthly data available, Tuesday’s survey suggests that workers may soon be challenged by both sides of the employment ledger.

With wages relatively stagnant in recent months, the University of Michigan’s consumer sentiment survey found that workers’ expectations for their families’ income growth over the next year were at a record low. This is the first recovery in which, seven quarters in, there have been zero gains in aggregate wages and salaries.

The NFIB report notes that the month of May was the third straight month in which small business optimism has declined, primarily due to "poor sales."