2012 Hiring to Increase in Black, White, Women Businesses, but not Hispanic

CEOs of small businesses plan to accelerate hiring over the next three months. According to the Gazelle Index, more than twice as many businesses plan to hire workers than to lay off workers. This was the response of CEOs, who operated companies owned by blacks, whites, men and women. However, it was not the case among Hispanic/Latino CEOs. For every business owned by a Hispanic/Latino that indicated it would hire over the next three months, another said it would cut back on employment.  These results are from the 4th Quarter, 2011 Gazelle Index survey of small businesses owned by minority, women and nonminority entrepreneurs.

There is no question that the number one theme going into the 2012 election is employment. People want to know how the President and presidential candidates plan to stimulate job growth and reduce unemployment.  A universally agreed-upon indicator of net job creation is what happens in small high-growth companies.

Recent data shows that the economy is growing at only 2%, yet the December unemployment report recorded a decrease in unemployment from 9% to 8.6%, because 600,000 fewer persons being unemployed. However, one-half of the decrease may have been created by workers getting discouraged and dropping out of the labor market. When workers leave the labor market, they are not counted among the unemployed. Despite this, economists are encouraged because the economy has withstood the destabilizing effects of the European debt crisis and the failure of the Congressional Super Committee to reach a compromise on the US debt.

The Gazelle Index found that the largest percentage of businesses that will add jobs in the future belong to African Americans; 37.4% indicated they plan to add workers while only 15.2% plan to decrease them. Businesses owned by whites were second to those owned by African-Americans; 23.5% plan to increase hiring and 11.2% will cut jobs. Hispanic/Latino businesses stood out, because only 20% plan to increase hiring, and because 17.6% will decrease it. This suggests there will be virtually no net change in employment in Hispanic/Latino-owned businesses. Businesses owned by men as well as those owned by women will increase hiring; 28% and 26% respectively. In contrast, 15% and 13% respectively plan to cut jobs.

The major ingredients of job creation are in place, and the results are confirmed by the latest Gazelle Index. Small high-growth businesses currently account for the largest net increase in jobs and the Gazelle Index projects that hiring will increase among those firms. Along with this, corporations are experiencing record profits and have record amounts of cash available to invest, but they are uncertain about the future; US consumers have money to spend as evidenced by the fact that they have been saving between 4 to 5% of their disposable income each month. Finally, short-term interest rates and mortgage rates are at record low levels. All of these factors mean that if confidence in the economy is restored, accelerating job creation will occur in 2012. The only things that can derail this development are very bad news from the Euro zone countries and a prolonged stalemate by the Debt Super Committee.

The Gazelle Index is a national random survey of 631 CEOs, who operate minority-owned, women-owned and nonminority-owned small businesses. It was designed by EuQuant and administered during November 2011. Each company included in the survey employed 10 to 100 workers, and the results have a margin of error of + or -5%.

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