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The One Big Thing Keeping Companies from Hiring

Many small businesses have put the brakes on hiring because of concern about the effects of over-regulation. . / Credit: Tied hands image via Shutterstock

In spite of increasing optimism that their businesses and the economy are headed in the right direction, many small businesses have put the brakes on hiring because of concern about the effects of over-regulation and rising energy costs, a survey released today (April 16) shows. And the blame-the-Beltway game is alive and well. Overall, small businesses see Washington as the problem instead of the solution, with 81 percent asking Washington to get out of the way.

Concern about overregulation is the highest it's been in the past year, with 42 percent of small businesses citing it as a major concern, and 52 percent citing regulation as the top threat to their business, an increase of 9 percentage points since last June, according to new survey of more than 1,300 small businesses conducted by the U.S. Chamber of Commerce, a business advocacy organization.

Nonetheless, the general economic outlook is positive, the survey found. Seven out of ten small business owners believe their business is headed in the right direction, the fourth consecutive quarter of increased optimism.

[The Real Reason No One's Hiring]

When asked to consider the direction of the U.S. economy, there was a significant increase in the percentage of small business owners who report that the economy is headed in the right direction. Nearly 17 percent small business owners said the U.S. economy is headed in the right direction, compared with 10 percent in January. While this percentage remains very low, it marks a significant change in perspective, the survey authors said.

But hiring has remained stagnant. Four out of five respondents (80 percent) said that taxation, regulation and legislation from Washington make it harder for their businesses to hire more employees, the survey found. Nearly three out of four small business owners surveyed cite the recent health care law as an obstacle to growing their business and hiring more employees.

There are real concerns as well regarding rising energy prices, with nearly a quarter (24 percent) of small business owners listing the perceived threat of more expensive fuel as their greatest concern, more than double the 10 percent level in March.

Across the board, a vast majority of small businesses (81 percent) are still looking for government to get out of the way. These small businesses see bureaucrats in Washington as the problem, but have sharpened their criticism of the administration and congressional Democrats in the past nine months.

"This survey confirms that slow gains in economic growth are being undermined by uncertainty over rising gas prices, an onslaught of pending regulations, and stalled pro-growth bills in Congress," said Dr. Martin Regalia, the Chamber’s chief economist. "To deliver long-term confidence to small businesses, Washington should act to provide certainty and enact regulatory reform that will boost their ability to grow."

Reach BusinessNewsDaily senior writer Ned Smith at nsmith@techmedianetwork.com. Follow him on Twitter @nedbsmith.

Ned Smith

Ned was senior writer at Sweeney Vesty, an international consulting firm, and was Vice President of communications for iQuest Analytics. Before that, he has been a web editor and managed the Internet and intranet sites for Citizens Communications. He began his journalism career as a police reporter with the Roanoke (Va.) Times, and was managing editor of American Way magazine and senior editor of Us. He was a Captain in the U.S. Air Force and has a masters in journalism from the University of Arizona.