Small businesses stay cautious on hiring as economic uncertainty persists

Hiring trends

Small businesses are taking a cautious approach to hiring as the broader labor market shows little momentum. While private payroll processor ADP reported a notable increase in job creation by businesses with fewer than 50 employees in February, overall job growth has been weak.

February was unexpectedly dismal, with the U.S. economy losing 92,000 jobs and unemployment edging up to 4.4%. Revisions to prior months also showed that job growth over the past year was almost negligible, with about 156,000 jobs added compared with just over 1 million in the previous year.

That has reinforced a pattern employers have described for months: reluctance to add workers, but also reluctance to lay off existing staff.

Business owners hold the line

Adam Orman, who owns two Italian restaurants in Austin, Texas, said he is hiring only to replace employees, not to expand his workforce.

“We’re hiring right now because we’re replacing people. But no — we’re not looking to increase employment,” Orman said.

He said his headcount has slipped to about 50 employees as inflation-weary consumers dine out and drink less. Orman also said hiring remains difficult, citing workers who left the restaurant industry during the pandemic and, more recently, immigrants leaving the workforce either by choice or because they were detained or deported.

Matt Hassett, CEO of New York-based Loftie, said his seven-person company has also stayed stable rather than grow.

“It’s stable. We’ve had a few people leave, and I’m not hiring to fill those positions,” Hassett said. He added that 2025 was a tough year and that tariffs made it hard to predict costs. In response, Loftie now has two employees in Europe and is expanding international sales.

Growth remains selective

Some business owners are still adding workers, though carefully. Barton O’Brien, founder of Annapolis, Maryland-based BAYDOG, said pet store owners are telling him that consumers are cutting back on nonessential purchases for their dogs.

“The consumer walks in, they get that bag of food, and those secondary purchases just aren’t happening, because nobody has any extra cash,” O’Brien said.

O’Brien said his costs have risen and profits have fallen, but he remains optimistic about growth. He hired two people in the fourth quarter, bringing his total headcount to seven, alongside another 45 contractors working in production, sales and e-commerce.