Many Small Firms Scrap Hiring Plans

About two-thirds of small businesses that had planned to hire workers no longer expect to do so in the wake of the Sept. 11 terrorist attacks, said the director of a national survey to be released today.

Bill Dunkelberg, chief economist of the National Federation of Independent Business in Washington, said his group’s survey showed a significant drop in business confidence after the attacks. Attitudes about future sales and capital investments, among other things, fell to the lowest level since 1993, he said.

“They’re worried the economy isn’t going to recover and that consumers will continue to sit on their wallets,” Dunkelberg said Tuesday.

He said the federation’s August survey showed that small businesses were generally starting to recover, with hiring plans and job openings up substantially. But the attacks have significantly changed the way small-business owners view the economy.

Indeed, in its August survey, the federation said its index of business owners planning to add workers within three to six months was 18 points higher than those planning to cut jobs. The index fell to 15 during the survey period of Sept. 1 to 11, then plummeted to just 6 points between Sept. 12 and 27.

Julie Costanzo, a small-business owner who is also executive director of the San Gabriel Chamber of Commerce, is a case in point. Costanzo, owner of a sports collectible business in San Gabriel, had planned to hire a part-time worker in November. But she has changed her mind.

“Like everybody, I’m in a wait-and-see situation,” she said.

Jay De Long, a vice president of the Orange County Business Council, an economic development agency, said: “With trade shows getting canceled, some [firms] are missing important sales opportunities and having cash-flow problems, especially hand-to-mouth start-ups.”

The federation’s September survey was based on results from 500 respondents. The 600,000-member federation is the nation’s largest small-business advocacy group. There are about 25.5 million small businesses in the U.S., according to the U.S. Small Business Administration.