Small Businesses Lead Layoff Stampede

mike lewis

• April 07 2009
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March’s unemployment numbers continued to stagger the imagination. As the nation’s unemployment rate hit the 8.5 percent mark, businesses with under 500 employees posted losses of 614,000 jobs. Even closer to home is the fact that 284,000 jobs were cut by companies with 50 staffers or less, while companies with over 500 employees trimmed a still significant 128,000.

According to an article on money.com:

“The resiliency displayed by these businesses earlier in the recession, as compared to medium- and large-size ones, is no longer apparent,” says Joel Prakken, chairman of ADP’s research partner, Macroeconomic Advisers.

Although shaving staff is often a last resort, many owners are finding themselves with no other choice if they want to keep their business alive. Credit is tight, consumer spending is down, entire industries are cutting back, and customers are paying their bills more slowly than they used to.

“It’s the domino effect,” says Pat Veesart, director of the Kansas Small Business Development Center at Garden City Community College. “In a city like Wichita, for example, there are layoffs in the aircraft industry and there’s an ancillary effect with the suppliers, but also an ancillary effect with the bars and restaurants who cater to the employees of those firms when they are on lunch breaks.”