Small Businesses Still Feeling Labor Crunch, Holding Back Expansion
With the United States’ jobless rate recently reaching a near 50-year low, small business owners are continuing to find that hiring isn’t so simple. In fact a new study from SurveyMonkey and CNBC finds that 52% of owners say it’s more difficult to find workers today than it was a year ago. As a result there are fears that some businesses might be holding back on expansions due to the tight labor market.
First the good news: the National Federation for Independent Businesses’ Small Business Optimism Index climbed to a four-month high in April, rising to 103.5. Unfortunately, while many businesses have available positions to fill, finding workers to take those positions still poses a challenge. Not only did 49% of owners surveyed tell the NFIB they’ve had few or no qualified applicants for an open position but 24% also ranked difficulties in hiring as their “Single Most Important Business Problem.”
The SurveyMonkey/CNBC poll found similar results and even spoke to entrepreneurs who are feeling the crunch. Among them is Kristin Ledgerwood who owns a specialty bakery in Evergreen, Colorado. Ledgerwood told CNBC that the trouble she’s experiencing with hiring is causing her to hold back on expanding, saying, “We are at this plateau, of where we could actually increase our sales more, but we don’t have the ability to because we are pretty tight on staff—everyone is maxed out on what they are able to do.”
Given the current hiring conditions, 22% of business owners surveyed by the NFIB also say they’ve lowered their application requirements for certain positions. Meanwhile some are turning their attention to retaining the employees they already have. This includes increasing wages, compensation, and benefits while also focusing on creating a positive work environment. For example Michael Canty of Alloy Bellows Precision & Welding told CNBC, “If an employee works on the floor, they know me. Our employees don’t just work at the company, they get engaged in the company—they know what we are doing, know what our views are. When they feel engaged they feel they’re a part of something bigger than they are and that’s what helps to keep them along with competitive pay and benefits.” He went on to explain why this was such a big issue for his company, noting, “Worker retention is always the most important issue for us, because they’re already here. They’re already trained and every time an organization like ours loses a talented employee, we lose institutional knowledge as well.”
All in all it seems that several small businesses are finding it difficult to take advantage of the still-booming economy due to a lack of available workers. This begs the question as to whether the tight labor market might serve to slow down continued growth. Then again this problem has persisted for some time — plus the increased wages that often result from the heightened hiring competition may also serve to boost growth. With that in mind it seems small business owners will need to get creative when it comes to hiring and retaining staff as well as plotting out future expansions.