It paid off. By 2006, Marathon Tool had a storefront and $4 million in annual sales. At their peak, they employed 17 full- and part-time workers. “We were humming right along,’’ Donna Olson said.
In general, hiring workers in the United States is expensive, especially compared with emerging competitors such as China and India. In Massachusetts, the costs are even higher.
Massachusetts has the highest labor costs of any state, according Moody’s Analytics, a forecasting firm in West Chester, Pa. The firm’s Cost of Doing Business index estimates that overall labor costs in Massachusetts are 14 percent above the national average.
“It’s certainly a problem for employers, and if it’s a problem for enough employers, it’s a problem for the public,’’ Northeastern University economics professor Alan Clayton-Matthews said. “For job growth, one of the things you need is competitive business costs. You need to be competitive.’’
Massachusetts experienced strong job growth in the first half of last year, but the economy slowed considerably in the second half, with the state shedding 2,100 jobs in December. While Massachusetts has added jobs faster than the nation as whole over the past year, it has historically lagged national job growth.
The recent recession hit the construction industry and Marathon Tool hard. Struggling to survive in 2008 and faced with rising health care costs, the Olsons eliminated health care coverage, offering employees a one-time payment of up to $5,000.
They also laid off workers for the first time. And the layoffs of those five employees came with a price tag. Much the way auto insurance rates rise after a crash, the Olsons’ unemployment insurance rates rose after the layoffs, tightening the financial squeeze.
But in the past three months, contractors have been buying more of the cases of nails that had gathered dust in the Olsons’ warehouse. The sale of each case — containing 4,000 nails — gives Donna Olson hope.
As demand has increased, the Olsons, like many other business owners, have increased the hours of existing employees, rather than take on the costs of hiring new ones. Their company recently started scheduling overtime for the first time.
Sitting in their office, warmed by a space heater, Donna Olson said that whenever sales pick up, costs do, too. There is little break from the strain of decisions affecting their livelihood and their employees.
And hiring new employees — as Obama’s recent speech urged — still feels like too much of a risk. Yes, she said, things are better, but only in a relative way: “We’re treading water instead of sinking.’’
Megan Woolhouse can be reached at mwoolhouse@globe.com.
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These people who run this tool store are more in tune with reality thn the assholes in DC.