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July 14, 2011

Uncertainty in Washington Keeps Businesses From Hiring

by Jeff Swicord

As lawmakers in the United States argue over the nation's debt ceiling and spar over who is responsible for the nation's 9.2 percent unemployment rate, many business owners look on in disbelief. They are uncertain about the state of the economy, and are looking for signs of confidence in Washington that it is safe to begin hiring.

At Carlos Interiors in Crofton, Maryland, company owner Cristina Uria sees a glimmer of hope. Business is up 15 percent from last year.

In 2008, when the recession began, Uria's business dropped 60 percent. Like many small business owners, she had to make  painful decisions in order to remain open.

“We had to let go probably about four people," said Uria. "During this recession, companies have needed to become leaner and meaner.  Any extra fat that we had, and extra expenses, we needed to cut them off.”

Uria said there were months when no one walked through the door at her design center. With more than 25 years in business, it was her established clients that kept her afloat. Even though business is picking up, she said she is not ready to hire new employees.

“The government in Washington is not giving us the right signals,” she said.

Uria cites the long, drawn out negotiations between the White House and Congress over raising the debt ceiling as an example. She said rhetoric on both sides adds to the confusion.

“The House cannot pass a bill that raises taxes on job creators,” said Speaker of the House John Boehner.

“I will not sign a 30-day or a 60-day or a 90-day extension," said President Barack Obama. "It is not going to get easier; it is going to get harder. So, we might as well do it now.”

Many economists agree that businesses need a clearer picture of the economy before they will begin hiring again. Ayman El Tarabishy, who  teaches economics at George Washington University, said, "Even President Obama coming out and saying you need to raise taxes. It’s not that they [business owners] don’t understand it, they do understand it. But what they don’t understand is the implications from a bottom line because they are still fighting it out. And until this settles down, until they see a clear path forward, they are going to wait.”

Uria said one of the things businesses have learned over the last two years is that they can survive without the workers they lost, giving them less incentive to hire.

“I think most of us have learned that we can stay still with less than what we had before," she said  "Of course, if the economy gets to the point to where it was before, I will have to have more people to handle the amount of work I have."

Even then, she said any new workers would not be full-time employees. She said the key is confidence. Confidence the economy is growing. Confidence that consumers are willing to spend. And confidence that politicians in Washington will find the right answers to revive the nation's economy.