A significant number of small businesses are struggling to hire workers and facing multiple challenges in their recruitment efforts, according to the National Federation of Independent Business (NFIB).
While 23 percent of respondents reported that labor quality was a major business problem, 12 percent reported labor costs to be their top business issue. In addition to labor worries, owners are also plagued by other economic issues.
“Inflation continues to outpace compensation which has reduced real incomes across the nation,” said NFIB Chief Economist Bill Dunkelberg. “Small business owners remain very pessimistic about the second half of the year as supply chain disruptions, inflation, and the labor shortage are not easing.”
Among ADP clients with between 50 and 499 employees, 79 percent said hiring was a big challenge. Almost one in four companies reported they were offering financial incentives to ensure their employees stay with them.
The growth of remote working has become another challenge to small businesses. Chris Margolin, CEO of workplace wellness company Health Designs, told The Wall Street Journal that his company is “no longer competing with other local companies in local geographies. We are competing against the world.”
While some small businesses are struggling in their hiring efforts, the overall number of jobs in the sector fell in May 2022. Businesses employing less than 50 workers hired fewer employees in May, according to the latest data from the ADP small-business report.
The goods-producing sector lost 20,000 jobs, with “very small” businesses leading with 17,000 job losses. In the service industry, there was a job loss of 71,000, with “very small” businesses accounting for 61,000 or over 85 percent of the total figure.