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HOW DOES HIRING ADDITIONAL EMPLOYEES AFFECT THE ECONOMY?

 * Small Business
   |
 * Managing Employees
   |
 * Employees

By Jonathan Lister
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RELATED

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Employment and unemployment are the driving forces behind economic growth and
stagnation. On a national scale, unemployment rates affect consumer confidence
in a variety of ways, including the desire to make purchases. As a small
business owner, you can affect your local economy by hiring additional workers
as long as your hiring is in response to consumer reaction to your company's
products and services.







INCREASED CONSUMER SPENDING

 1. New employment opportunities provide chances for previously unemployed or
    under-employed workers to increase take home pay and better their meet
    financial obligations. Increased employee earnings leads to a higher rate of
    consumer spending, which benefits other businesses who depend on consumer
    sales to stay open and pay vendors. Hiring additional employees for your
    small business can achieve these affects on a small scale and increase the
    money circulating in the marketplace. This leads to a healthier overall
    local economy and allows more businesses to thrive.





STIMULATING ECONOMIC GROWTH

 1. When a high level of unemployment exists locally or nationally, economic
    growth suffers. Consumers save more money and devote less to spending
    outside of the bare minimums such as food, shelter and servicing debt.
    Hiring additional employees for your small business stimulates economic
    growth on a small scale as a byproduct of localized increases in consumer
    spending. The more money consumers spend on goods and services, the more
    available capital your company and others in the area have to develop larger
    product lines and service offerings.


LOOSENING OF AVAILABLE CAPITAL

 1. Earning steady paychecks allows small business employees to pay down
    existing debts and improve their financial health. When this happens,
    financial institutions in your area might react to the increase in
    employment levels with a willingness to lend more money to consumers and
    businesses in your area. With capital flowing more easily, your employees
    might be able to make larger purchases, including real estate and
    automobiles, which can further improve economic conditions in your area and
    increase work for additional companies. This creates a self-sustaining cycle
    beginning with your decision to hire more employees.


REASONS TO ADD EMPLOYEES

 1. As a small business owner, don't hire employees simply out of the desire to
    employ more consumers in your area. Doing so could weigh down your company's
    revenue and imperil the future of your business. Hiring to meet a need
    proposed by the market, including increased demand for your company's
    products or services, is an ideal reason to add workers to your small
    business. Employing too many new workers can also hurt your company's
    productivity level as experienced workers must train the new workers.
    Additional bodies may also harm efficiency at the job site, so it's
    important to have a working knowledge of how many employees it takes at
    minimum to create your products and services.




References

 * SparkNotes: Unemployment

Writer Bio

Jonathan Lister has been a writer and content marketer since 2003. His latest
book publication, "Bullet, a Demos City Novel" is forthcoming from J Taylor
Publishing in June 2014. He holds a Bachelor of Arts in English from
Shippensburg University and a Master of Fine Arts in writing and poetics from
Naropa University.





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