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Franchise Hiring Softens in September; Small Businesses Lose Positions

Now hiringFranchise hiring in September was soft, with franchised establishments only increasing their hiring by 14,000 jobs. That is below average and the softest gain since April’s one-time drop of only 4,800 franchise jobs, which was followed by months of robust hiring gains.

Hotel and lodging in September had a rare drop in hiring compared to August. Restaurants and car dealerships, the two largest employer segments among franchised establishments, collectively led the hiring in raw numbers for the month.

In contrast, the hiring by small businesses in the United States actually fell by 7,000 in September, while private sector employment hiring increased by a modest 135,000 jobs. Health care and business services were the two biggest gainers in employing people.

Economist think that hurricanes are to blame for the soft hiring numbers. For small businesses, the competition for talent is squeezing the smaller of small businesses, those with fewer than 20 employees. These firms are finding it increasingly difficultly to offer the pay and worker benefits to compete with other employers.

“In September, small businesses experienced a dip in hiring,” said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute.  “This is in part due to Hurricane’s Harvey and Irma which significantly impacted smaller retailers.  “In addition, the continued slow down we have seen in small business hiring could be due to a lack of competitive compensation to attract skilled talent.”  

According to the U.S. Bureau of Labor Statistics, the national unemployment rate as of August was 4.4 percent. The Bureau will release September’s figures on Friday.

Keith Miller, a multiple-unit franchise owner of sandwich shops in Northern California and chairman of the Washington, D.C.-based Coalition of Franchisee Associations, thinks that most franchisees are experiencing a critical labor shortage. “It is a challenge to just minimally staff outlets, much less with qualified employees,” says Miller. “This labor shortage is negatively impacting our franchise operations, and is wide-spread.”

Mark Zandi, chief economist of Moody’s Analytics, stresses that the softness in hiring is just a temporary setback. “Hurricanes Harvey and Irma hurt the job market in September. Looking through the storms the job market remains sturdy and strong,” says the economist.  

Payroll data firm ADP derives its employment figures from actual payroll data and adjusts the figures on a seasonal basis.


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Don Sniegowski is editor of Blue MauMau, the daily news journal for franchise & small business owners. Call him at +1 (270) 321-1268, tweet @bluemaumau or email don@bluemaumau.org.