ADP employment report: Superstorm Sandy hit small firms hardest

Sandy trimmed job growth in November by 86,000 workers, ADP employment report says. Small businesses took the hardest hit, ADP says, creating the fewest jobs in nearly two years.    

By , Staff writer

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    Employee Carla Lepis wheels some of the artwork from the heavily damaged Matisse restaurant last month in Belmar, N.J. According to the owner, the popular oceanfront restaurant was so battered by superstorm Sandy that it will have to be torn down. A new ADP report suggests that small firms were hit particularly hard by the storm.
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When a hurricane or superstorm hits a large business, it can knock out operations for days. But the corporation usually has the resources to get back up and running. For smaller businesses, it’s a different story.

 It can take weeks, even months, to recover – if small businesses can recover at all. When superstorm Sandy hit New Jersey and New York, the impact on small business appears to have been abnormally large.

The latest evidence comes from the ADP employment report, released Wednesday, which offered the first evidence of how hard superstorm Sandy affected hiring last month. Overall, Sandy reduced private-sector job gains by some 86,000 workers in November, payroll processor Automatic Data Processing estimates. So instead of creating a robust 200,000-plus private sector jobs, November’s actual employment increase was a more modest 118,000.

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Sandy's impact on small business hiring was far more pronounced. Businesses with fewer than 50 employers added only 19,000 jobs in November, according to the ADP report. That’s the lowest number in nearly two years. And the share of jobs added by small business, which typically account for a third to a half of all jobs private-sector jobs created, fell to a low of 16.2 percent.

“My guess is that the storm was particularly hard on smaller companies,” says Mark Zandi, chief economist of Moody's Analytics, which collaborated with ADP to produce the report.

Disaster loans are only beginning to trickle in. The Small Business Administration, which typically offers disaster loans to small firms, had approved only 73 disaster loans through Nov. 30, amounting to only $83 million, according to Bloomberg Businessweek. The agency blames misperceptions about eligibility among business owners.

Anecdotally, small businesses in the hardest hit areas of New Jersey and New York have taken it on the chin.

“Basically, our entire business had collapsed in onto itself,” says Susan Povich, co-owner of Red Hook Lobster Pound in Brooklyn, in a new mini-documentary. The lobster wholesaler and retailer lost most of its equipment, had to let go all of its employees, and is only beginning to get operations back to normal. Ms. Povich hopes to be fully operational by Valentine’s Day. (See the video of her story above.)

The mini-documentary is part of a series on how superstorm Sandy affected small businesses and produced by IIL Media in New York. Called “Weathering the storm,” the series will have 15 segments and air on YouTube as well as the company’s own website through Dec. 10.

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