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Despite Government Shutdown, U.S. Businesses Remain Optimistic About Economy

  • Human Resources
  • Article
  • 6 min. Read
  • Last Updated: 03/13/2019
Snapshot of larger graphic, showing change since October 2018 report in optimism and pessimism on U.S. economy, business outlook, and ability to fill open positions with qualified candidates.
The Paychex Business Sentiment Report for Spring 2019 reveals that optimism of business owners during the past six months dipped — especially after a 35-day federal government shutdown — but still remained positive overall. See how they felt about the U.S. economy, regulations, hiring, and more in our infographic.

Table of Contents

In less than six months, the optimism of business owners is down — albeit still positive — across all categories, according to the Paychex Business Sentiment Report for Spring 2019.

While several factors could have affected the change, it should be noted that this survey was conducted from Feb. 15-26, 2019, following a 35-day government shutdown (Dec. 22, 2018 to Jan. 25, 2019) and post-State of the Union address (Feb. 5).

On a scale of 1-100, with 1 representing the highest level of pessimism and 100 representing the peak of optimism, business owners’ overall business outlook is down six points since October, falling to 65/100 — the same number reported in July 2018. Business owners’ confidence in the U.S. economy is down three points — 62/100 — since the last report, but remains two points above July’s results.

infographic showing business owner sentiment about different aspects of business

“Though optimism in a variety of areas is down from our last Business Sentiment Report, these results still reflect a positive outlook among business owners,” said Martin Mucci, Paychex president and CEO. “The decline seen in these latest results are primarily around hiring and the ability to raise wages.

“This is the lowest level of confidence in employers’ ability to fill openings with qualified workers that we’ve seen since starting the Business Sentiment Report in July of last year,” Mucci added. “While jobs growth remains steady, business owners are still having a hard time finding candidates with the right skillsets to meet their needs in today’s tight labor market.”

Here’s a quick snapshot from the past three surveys reflecting some of the changes in outlook.

Subjects Summer 2018 Fall 2018 Spring 2019
Overall Business Outlook 65/100 71/100 65/100

Access to Capital

62/100 65/100 64/100
U.S. Economy Overall 60/100 65/100 72/100

Ability to Find New Customers

69/100 68/100 62/100
Ability to Make Capital Investments 59/100 62/100 53/100
Overall Regulatory Environment 50/100 53/100 50/100
Ability to Fill Open Positions
w/ Qualified Candidates
50/100 51/100 43/100
Ability to Raise Wages 48/100 51/100 41/100

The larger the business, the better the outlook*

Even though there were dips in every major category — from the state of the economy to the overall business outlook — among the three business sizes surveyed, the larger the employer the more optimism they expressed.

Although optimism dropped several points in most categories from the Fall 2018 report for the three business sizes surveyed, the most notable change was the 21-point plunge by the 1-19 employee group on how they feel about the regulatory environment — down to 50/100 — while the larger business groups experienced a slight change or no change at all (the 20-99 employee group was at 67 for both reports).

Subjects 1 - 19 employees 20 - 99 employees 100 - 500 employees
U.S. economy 62/100 71/100 75/100
Overall business outlook 65/100 71/100 80/100
Regulatory environment 50/100 67/100 77/100
Ability to Raise Wages 39/100 74/100 82/100
Ability to Fill Open Positions
w/ Qualified Candidates
42/100 74/100 80/100

*-Using the U.S. Census, all data in this report is weighted by business size by employee count to accurately represent the small business landscape in the U.S. Weighting results based on this criterion means the data by business size represents raw responses.

Recession-proof? It depends

Similarly to their outlook on the economy, the smaller the business the less confidence they expressed in their company’s ability to rebound from an economic recession. More than one-third of small businesses (1-19 employees) said they were not confident.

  1 – 19 employees 20 – 99 employees 100 – 500 employees
Not Confident 34% 15% 9%

Somewhat Confident

47% 49% 37%
Very Confident 19% 37% 54%

Big businesses like tax reform

In less than five months — and with the effects of the Tax Cuts and Jobs Act factored in — the difference in the perceived positive impact of tax reform on large and small businesses grew 18 percent, favoring large businesses, with the difference between the two at 57 percent.

Tax reform 1 - 19 employees 20 - 99 employees 100 - 500 employees
Strong Positive Impact 6% 25% 43%
Some Positive Impact 20% 28% 40%
No Impact 47% 24% 12%
Some Negative Impact 20% 17% 3%
Strong Negative Impact 7% 5% 2%

More differences based on legislation

Larger businesses felt a more positive impact of wage legislation (e.g., minimum wage laws, overtime rules, pay equity) — up six points to 78 percent — from the previous report. Smaller businesses expressed less of a positive impact, with the 1-19 employee group dipping nine percentage points and into single digits, while the 20-99 employee group saw a six-point dip.

The groups also differed greatly on the positive impact of immigration reform and foreign trade and tariffs, with the 100-500 employee group expressing a 74 percent positive impact about the latter while the 1-19 employee group was at 11 percent.

Wage Legislation 1 - 19 employees 20 - 99 employees 100 - 500 employees
Strong Positive Impact 4% 22% 39%
Some Positive Impact 5% 25% 39%
No Impact 72% 37% 18%
Some Negative Impact 13% 11% 3%
Strong Negative Impact 7% 5% 1%
Immigration Reform 1 - 19 employees 20 - 99 employees 100 - 500 employees
Strong Positive Impact 6% 25% 34%
Some Positive Impact 6% 20% 44%
No Impact 80% 43% 17%
Some Negative Impact 2% 10% 3%
Strong Negative Impact 6% 3% 2%
Foreign Trade and Trade Tariffs 1 - 19 employees 20 - 99 employees 100 - 500 employees
Strong Positive Impact 3% 19% 34%
Some Positive Impact 8% 21% 40%
No Impact 67% 41% 17%
Some Negative Impact 14% 15% 7%
Strong Negative Impact 8% 5% 2%

The HR challenge

Even though the small business group’s (1-19 employees) outlook on the regulatory environment experienced a notable dip from previous reports (second chart from top), leaving them right in the middle of optimistic and pessimistic (50 percent), this same group expressed that their workforce size made managing HR less challenging. Conversely, among larger businesses (100-500 employees), nearly 90 percent find managing HR to be at least somewhat challenging.

Managing HR 1 – 19 employees 20 – 99 employees 100 – 500 employees
Not Challenging 62% 27% 11%

Somewhat Challenging

28% 50% 49%
Very Challenging 10% 23% 40%

Most interesting, perhaps, was that nearly 2-in-5 employers (39 percent) with 100-500 employees feel that managing employee conflicts and harassment in the workplace is very challenging. That decreases dramatically to 22 percent in organizations with 20-99 employees and 7 percent for those with 1-19 employees.

Location, location, location

Without much change in its response from the previous report in October, the Midwest saw its nearly status quo optimism on the U.S. economy overall (64/100) and its positive business outlook overall (70/100) land it as the top geographic area in each category. Those numbers almost mirrored the last report, with the only change a 1-point dip in overall business outlook. The region inched up from third.

However, there was a significant shift in relation to other areas from report to report, with the South dropping to second in economic outlook and the West falling from first to fourth in overall business outlook with a 21-point plummet.

Subjects West Midwest South Northeast
U.S. economy 50/100 64/100 62/100 52/100
Overall business outlook 56/100 70/100 68/100 59/100
Regulatory Environment 52/100 53/100 52/100 46/100
Ability to Raise Wages 50/100 32/100 41/100 43/100
Ability to Fill Open Positions
w/ Qualified Candidates
43/100 53/100 46/100 30/100

Also of interest, especially in today’s competitive labor market, was that half of the respondents (48 percent) from the West find offering competitive benefits to be a challenge, while only 30 percent of business owners in the Northeast feel confident in their ability to hire capable talent.

People, places, and wage disparity

Despite having similar positive outlooks on the U.S. economy, the overall business outlook, and even the regulatory environment, when it comes to business owners’ confidence in the ability to raise wages, the disparity between low population density (rural – 15/100) and high population density (urban – 49/100) is noteworthy.

  Rural Suburban Urban
U.S. Economy 63/100 62/100 55/100
Overall Business Outlook 68/100 67/100 57/100
Regulatory Environment 49/100 50/100 52/100
Ability to Raise Wages 15/100 50/100 49/100
Ability to Fill Open Positions
w/ Qualified Candidates
30/100 43/100 49/100

Manufacturing loses a little steam

Despite a four-point dip, U.S. manufacturing remained the most optimistic industry about the U.S. economy — and by 10 points (72/100), the third straight Sentiment Report it has led all other industries in this category.

Most industries were within a few points of one another in most categories and had confidence level highs of 45 points (retail/wholesale — ability to fill open positions with qualified candidates) and 65 percent (manufacturing, other — overall business outlook).

However, the starkest discovery was the 19/100 posted by the retail/wholesale sector’s confidence in its ability to raise wages, more than 20 points lower than “other” and 35 points fewer than manufacturing.

Manufacturing Other
U.S. economy 62/100 62/100 72/100 51/100
Overall business outlook 61/100 64/100 65/100 65/100
Regulatory Environment 49/100 52/100 51/100 50/100
Ability to Raise Wages 50/100 19/100 54/100 40/100
Ability to Fill Open Positions
w/ Qualified Candidates
43/100 45/100 42/100 27/100

Age isn’t just a number, it’s an attitude

Owner age seems to have an impact on how positive one is in hiring and raising wages, as younger owners (18-34) demonstrate in the report as compared to older owners (50-plus). Also notable is the 63 percent positive outlook that the youngest group (18-34) has about the regulatory environment.

  18 - 34 35-49 50+
U.S. economy 60/100 57/100 62/100
Overall business outlook 81/100 62/100 65/100
Regulatory Environment 63/100 57/100 50/100
Ability to Raise Wages 43/100 53/100 35/100
Ability to Fill Open Positions
w/ Qualified Candidates
52/100 51/100 32/100

Establishing one’s self makes a difference

The data seems to support that the more you do something, the more comfortable it becomes to do and the more comfortable you are at doing it. The age of a company can have an impact on business outlook — companies 20 or more years old, according to the Sentiment Report, think positively about business overall (65/100) as compared to a company with less than two years of experience (53/100).

The biggest difference the age of a company has on optimism is the ability to raise wages (45/100 for those in business 20-plus years; 19/100 for less than two years) and ability to hire qualified talent (31/100 for 20-plus years; 10/100 for less than two years).

  Less Than 2 Years
in Business
2-9 Years/
in Business
10-19 Years
in Business
20+ Years
in Business
U.S. economy 60/100 60/100 51/100 65/100
Overall business outlook 53/100 65/100 61/100 65/100
Regulatory Environment 44/100 54/100 50/100 50/100
Ability to Raise Wages 19/100 49/100 48/100 45/100
Ability to Fill Open Positions
w/ Qualified Candidates
10/100 51/100 48/100 31/100

Men remain more optimistic about than women

Even though male business owners expressed a drop in confidence in the U.S. economy, twice that of women business owners in the past six months, men continue to feel better about the economy overall (64/100 to 55/100). The gender gap when it comes to confidence in borrowing money is more than 20 points — 73 points for men and 52 points for women.

  Female Male
U.S. economy 55/100 64/100
Overall business outlook 61/100 68/100
Regulatory Environment 50/100 52/100
Ability to Make
Capital Investments
50/100 61/100
Access to Capital 52/100 73/100

Staying on top of the regulatory landscape

It doesn’t make a difference the size of your business; if you own one you must remain compliant with mandated federal, state, and local regulations. However, as business owners know, that landscape is constantly changing and staying on top of it can prove time-consuming.

As the data in this Sentiment Report revealed, there were very few instances where confidence in the regulatory environment reached above 50 percent. It’s important to know the regulatory issues that could affect your business and have the tools and resources to address them.

About the Paychex Business Sentiment Report

Data included in the Paychex Business Sentiment Report was taken from the results of the Paychex Business Survey, administered by Bredin, a third-party research firm. The survey was conducted online between Feb. 15-26, 2019 and polled 500 randomly selected principals of U.S. companies with 1-500 employees. Results are representative of how small business owners feel, on a scale of 1 to 100 with 1 representing the highest level of pessimism and 100 representing the highest level of optimism. The margin of error for this study was +/- 4 percent. This is the third installment of the Paychex Business Sentiment Report. The previous two reports were released in summer 2018 and fall 2018.


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* This content is for educational purposes only, is not intended to provide specific legal advice, and should not be used as a substitute for the legal advice of a qualified attorney or other professional. The information may not reflect the most current legal developments, may be changed without notice and is not guaranteed to be complete, correct, or up-to-date.