With the Fed's rate hike behind us and markets roiling to gain financial footing in the waning days of the year, economic forecasters and investors are looking to 2016.
One little known area that might deserve a little attention is small business hiring.
Some 95% of U.S. employers are classified as small businesses with fewer than 50 full-time workers on staff. Given the breadth of industries and geographies covered by those businesses, they tend to be a reliable barometer of economic conditions ahead of large businesses.
Consider for instance the institutional inertia of big businesses, which tend to have slower decision-making cycles, investment implementation, as well as protracted hiring and firing practices as a result of scale. Larger companies frequently take longer to implement lay-offs, preferring actions such as attrition or hiring freezes so they don't have to go through the expense and time of rehiring when economic conditions turn around. Small businesses simply can't carry those kinds of labor costs -- they have to react faster, than larger operations.
That's where the Paychex ' IHS Small Business Jobs Index comes in. It tracks employment growth among small businesses as well as sectors that are hiring and those that are not.
What the index found that should leave observers worried is that small businesses are hiring, but they're hiring more part-time workers than before.
"Our data show that within the past two years part-time employment has gone from approximately 6% to 9% of total employment for small businesses with 50 or fewer employees. This is a big deal -- because it marks a 50% increase within a relatively small window of time," Paychex President and CEO Martin Mucci told TheStreet.
According to Mucci, these data suggest that small businesses may actually be hiring more employees, but at part-time rates to better control benefit costs as well as compliance and overtime expenses.
"Under the Affordable Care Act, if a business has 50 or more fulltime employees, including full-time equivalents (those working a minimum of 30 hours per week), they must offer those employees and their dependents health insurance. It's fair to say these employers may be choosing part-time employees to keep healthcare costs and compliance expenses down," he said. "Additionally, proposed expansion of federal overtime rules are expected to take effect in 2016, which may also be driving this move toward part-time employees as well."
So what does that mean for small businesses and the broader economy as a whole for 2016?