| Sole proprietor incomes and corporate profits were up 6.2% and 18.3%, respectively, as compensation costs rose 4% and the cost of capital, as indicated by the prime rate, fell by 11.8%, the report said. Productivity was up by 4.5%. The cost and availability of insurance, primarily health insurance, was cited by small businesses as their largest problem last year. “A survey by the Kaiser Family Foundation and Health Research and Education Trust found that insurance rates for small firms rose 15.5% in 2003,” the report said. “In response, more small firms are no longer offering health benefits or are charging employees a higher share of the cost. The percentage of small firms providing health insurance coverage to their employees fell from 71% in 1999 to 65% in 2003.” The findings of the study are significant for the job market because small firms represent about 99% of employers, who employ about half of the private-sector workforce and generate between two-thirds and three-quarters of net new jobs. Only about 17,000 of the 5.7 million firms in the U.S. have 500 or more employees. “With proprietors’ income up, corporate profits up, interest rates low, financing available and productivity maxed out,” the report concluded that hiring increases were likely this year. “Despite a 5.7% unemployment rate at the end of 2003, a labor shortage could still potentially arise quickly,’ the study added. | 
