LOS ANGELES – A new survey shows Main Street’s plan to boost wages and raise prices in the business sector.
More small and mid-sized businesses plan to raise their employees salaries, according to a fall report in the PNC Bank Economic Outlook Survey.
About 38 percent of US business owners surveyed said that they expect to increase employee pay in the next six months, the most since the financial crisis struck in 2008, as well as to hike up prices during the next year. It’s a preplanned strategy attributing to other upcoming high costs, such as health care, but also to increased general optimism for their business.
The National Federation of Independent Business also said its Small Business Optimism Index rose 0.4 points, to 96.1.
“Some of [the rising numbers] is health-care cost related, but they also feel business is improving,” said PNC’s Chief Economist Stuart Hoffman. “They are also planning on pay raises, so their labor costs will also go up.”
Besides rising cost pressures, Hoffman also said that small companies feel that demand for goods/services and the overall economy are improving, so they can afford to raise prices without affecting business.
However, not everyone feels this way. Some businesses showed little to no change in the survey, based on a random sample of 598 small business owners. The job growth indicated in the survey was sluggish, with barely any new workers hired (about 0.02 per firm), and even fewer saying they planned to hire more in the future.
Some businesses even appeared to have lost their pricing power. Fifteen percent of the respondents admitted to reducing prices, and there was a slight drop in the number of owners who plan to raise their prices.
Though many are optimistic for an improvement in overall business, the optimism index—consisting of 10 different components—points to a slightly slower economic growth of around 2 percent, four points below where it was before the financial crisis and recession.
(With reports from NBC News and Reuters)
