With slow sales and tight credit, many small businesses are caught in a death spiral that contributes to the hemorrhaging job market.
Copied and Pasted by Jennifer Ng
NEW YORK (CNNMoney.com) -- Employment at small businesses with 500 or fewer employees decreased by 614,000 positions in March, marking one of the sharpest drops yet in 14 consecutive months of declines, according to an employment report released Wednesday by payroll processor ADP (ADP, Fortune 500).
The magnitude of the losses indicates that the recession is ravaging the small companies that employ an estimated half of America's workers.
Compared to large firms with more than 500 employees, which shed 128,000 jobs, those with fewer than 50 employees lost 284,000 jobs.
"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.
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