Wednesday, June 20, 2018
Politics

PolitiFact: Shutdown caused some CEOs to delay hiring over next six months

The statement

"Half of all CEOs say that the shutdown and the threat of shutdown set back their plans to hire over the next six months."

President Barack Obama, Oct. 17 in a public address

The ruling

The White House pointed us to a recent Business Roundtable survey.

"Fifty percent of responding CEOs indicated that the ongoing disagreement in Washington over the 2014 budget and the debt ceiling is having a negative impact on their plans for hiring additional employees over the next six months," the report reads.

On its face, that's in line with what Obama said, but we wanted to see how Business Roundtable acquired its results. Their report notes, "Responses were received from 134 member CEOs, 63 percent of the total Business Roundtable membership."

Business Roundtable's membership tends to be larger companies. Spokeswoman Amanda DeBard told us CEOs are invited based on revenue, industry and market capitalization, so it's safe to say the poll responses don't reflect a random sample of U.S. businesses.

We ran the poll results by another business group, the National Federation of Independent Businesses. Senior policy analyst Holly Wade said she saw a similar sentiment among the smaller business owners that the federation represents.

"In September, there were more small-business owners that were feeling pessimistic about business conditions six months out," she said.

There wasn't much opinion voiced about delaying employment specifically, though. But Wade said that could be because small businesses were already hiring less during the economic recovery compared to bigger corporations.

Why would CEOs want to delay hiring?

With another possible debt ceiling default looming Feb. 7, University of Maryland finance professor David Kass said it's likely that a budget deal will lead to tighter fiscal policy, which would slow down the economy and cause CEOs to put off hiring decisions for a few months.

Another factor that would contribute to CEO anxiety is consumer behavior. While day-to-day spending probably won't change post-shutdown, consumers will likely postpone higher-ticket purchases like homes and cars.

"On the demand side, there's uncertainty on the consumers' part, which in turn will have an impact on CEOs," Kass said. "They're trying to predict their future sales and what the environment will look like. It's a lose-lose situation for everyone."

Obama said 50 percent of CEOs are delaying hiring due to the shutdown, which accurately cites the results of a poll sponsored by the Business Roundtable. The survey's limited sampling, though, means the responses aren't necessarily representative of all U.S. businesses. We rate Obama's claim Mostly True.

Julie Kliegman, Times staff writer

Edited for print. Read the full version at PolitiFact.com.

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