Businesses are hiring again, but cautiously

Nina Vaca expects to hire more than 50 people this year for her firm, Pinnacle Technical Resources in Dallas.
Nina Vaca expects to hire more than 50 people this year for her firm, Pinnacle Technical Resources in Dallas. (LM OTERO / Associated Press)
Posted: June 18, 2013

Nina Vaca is interviewing job applicants at her staffing company again, after putting hiring on hold at the end of 2012.

The reason for her caution: months of uncertainty about federal taxes and budget cuts.

But those disappeared, and Vaca expects to hire more than 50 people for her firm, Pinnacle Technical Resources, by year's end. Demand is soaring for the high-tech temporary workers it places at large corporations.

"It's a great time to double down," said Vaca, whose 160-employee company is based in Dallas.

Her story will sound familiar to entrepreneurs nationwide. They want to add staff, and many are, but they're taking their time before they commit, waiting for signals revenue will remain strong.

That wariness helps explain the slow but steady growth in U.S. jobs. Companies of all sizes have added an average 163,000 jobs a month since March, according to the Labor Department. Surveys released last week by payroll provider ADP and software maker Intuit showed small-business hiring picking up momentum.

The ADP survey showed that small businesses added 58,000 jobs in May, up from 42,000 in April. But that's well below the 129,000 average at the start of 2006, when the economy was booming.

Vaca held off hiring while she waited to see what impact federal budget cuts would have. But by the first quarter's end, she could see that companies needed temporary high-tech workers and that her business would be strong enough to pay for her own hires. She expects revenue to rise 12 percent to 15 percent this year.

"We were cautious in our hiring, and then literally, [business] exploded," she said.

Some business owners are waiting to hire because they need to be sure they can pay salaries and still meet other expenses - staffing is a flexible expense, but rent, taxes, and utilities are not.

Start-ups that have little or no revenue can't make many hires unless they get money from investors.

Personify, which makes videoconferencing software, held off hiring late last year, in part because investor money was scarce and in part because investors were wary about the economy and taxes, CEO Sanjay Patel said.

But the company, based in Chicago, also has to be cautious because it must answer to investors about how it uses their money.

"We weren't in a situation where we could just grow to our hearts' content," Patel said. "It all had to be justified according to the business plan."

Personify's hiring also has been slowed by a shortage of skilled candidates. The company is building a sales and marketing team, but not all salespeople are qualified to sell a high-tech product.

"You have to be able to speak confidently about a very new technology when a prospective customer asks about how we do what we do," Patel says.

Lack of qualified applicants is one reason small businesses have been slow to hire, according to surveys including the monthly hiring report by the National Federation of Independent Business.

Patel estimated he considered 20 to 30 people for three positions he recently filled. The company, which has 26 employees, hired one staffer in December and another in May, has a vice president of marketing arriving this month, and may hire up to eight more staffers this year, he said.

A survey taken by the Hartford financial-services company in April and May found 37 percent of small businesses planned to hire in the next year.

A more optimistic reading came from research by Pepperdine University and Dun & Bradstreet Credibility Corp., which found 58 percent of small businesses said they planned to hire in the same period.

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