NAPEO Finds Mostly Positive Small Business Job Market for Q4

September 5, 2007 ( - Although almost half (45%) of small businesses served by professional employer organizations surveyed said they had about the same amount of difficulty hiring this year as last and almost a third said it was harder to hire than a year ago, 47% said they would hire in the fourth quarter, and a majority of those companies said they would hire in numbers equal to more than 10% of their workforce.

According to the National Association of Professional Employer Organizations (NAPEO), its survey found almost half (49%) of small businesses said they are planning to not hire or fire in October, November and December, while 4% said they would lay off people. Asked whether it would be more difficult to hire in the next twelve months, roughly a quarter of businesses said no, a quarter said yes, and the rest said it would be about the same.

The State of the Job Market for Small Businesses found a quarter of businesses said employees would see raises of 4% or more in the next 12 months, while almost half said raises would be from 1% to 3% on average. A quarter said they would not give base pay raises in the next 12 months. Three quarters of respondents said employees saw raises of 1% to 3% this past year.

Three-quarters of small businesses surveyed said they had not added or expanded benefits this year. NAPEO commented that was not necessarily attributable to ease in hiring without a better benefits package, but could be because it is harder for small businesses to afford even the three basic benefits – competitive pay, medical insurance and a 401(k) retirement plan.

Far fewer manufacturers ruled out improving benefits – less than two-thirds-while service companies said they were even less likely to sweeten benefits.

Of the few businesses that did expand benefits, by far the most popular – cited by about 8% of respondents each – were sick days, health insurance and dental and vision plans.

Only a tenth of the 352 companies in surveyed reported turnover rates between 21% and 30%. Four-fifths reported turnover of less than 25%. Most (about 66%) said turnover rates had not changed much this year from last. The most common reason companies said employees leave were for “personal reasons,” such as marriage, followed by “better pay,” and being fired for performance.

The complete survey results are here .