Although there is much good news about people getting back to work and the country’s economy rebounding after the Covid-19 shutdown, one sector that is still struggling is that of small business owners trying to find skilled workers. Small businesses have openings and there are workers applying, but there is still a disconnect between what companies need and who is applying.
The current economic status quo is challenging small businesses. In their July Small Business Jobs Report, the National Federation of Independent Businesses, cited “labor quality” as their biggest concern, and 26% of those surveyed expressed that labor quality was their “single most important problem.” Nearly two-thirds of survey respondents (63%) are hiring or trying to hire, and of this number, 89% said they were having trouble finding “qualified job applicants.” Although there are still many people out of work, they don’t necessarily have the skill set that hiring businesses need.
For the nation overall, however, the recent jobs report for July showed some good news. “There were 943,000 jobs in July and the unemployment rate fell to 5.4% — a new low of the pandemic era.”
There are many reasons why some people are not jumping back into the labor pool. These range from the fact that schools have not been open and people had to stay home for child care or elder care, to the fact that the government was giving a stimulus cushion to help people financially survive the pandemic. Ironically, some programs that the government started in order to help the average American survive the pandemic, are ultimately hurting the small businesses that are currently trying to hire qualified applicants. The ban on evictions, the deferral of student loans and mortgages, and other benefits kept people at home because they had a cushion, but the small businesses need the cushion of enough employees to run their businesses, as well.
“We know that about one in four workers is taking home more money on unemployment than they earned working,” Neil Bradley, U.S. Chamber of Commerce Executive Vice President told Yahoo! Finance Live. The incentive to stay home came about with the money offered, but it is time to go back to reality soon.
Many of these pandemic aids have ended or are soon ending, which should offer small business owners a relief as more people try to find jobs. The stimulus benefits will end September 6, though many states cut them off earlier, and 7.5 million Americans will be looking for work. The eviction ban expired in July, and by the end of September, people will need to start repaying their student loans.
Small businesses are doing their best to attract qualified workers. Many have implemented a hiring bonus, which is an upfront cost but doesn’t tie them down permanently to paying higher wages. But certainly businesses are raising wages too, in hopes of getting the skilled workers they need. A full 39% of small business have increased pay. This gets into a cycle, because if you raise the pay for those you are just hiring, you also need to raise the pay for those already employed. Small business owners are also trying to offer the flexibility, creativity, and autonomy that is sometimes difficult to find in larger corporations. Being a big fish in a small pond is appealing to new workers, and small companies can lure in qualified applicants that way.
Kenan Fikri, head of research at the Economic Innovation Group, a business think tank, sees things from the workers’ perspective. “Workers have realized that they have leverage in the economy right now in the short-term. In part because of this rapid, rapid reopening process, they’re able to be choosy. I think what we’ll start to see over the next six months is whether that leverage is durable and long lasting, or whether it’s kind of fleeting,” he added.
With the Delta variant rearing its ugly head, there is even more uncertainty about what will happen next in terms of hiring. But with some of the pandemic government aid ending, businesses should be able to start matching up with applicants who have the skill sets they need for their companies, so the country can continue to rebound in the coming months.
I like to spend my time giving back with organizations that focus on mentoring aspiring entrepreneurs. I have supported after school programs that focus on entrepreneurial and global initiatives in local primary schools. I recently extended my mentoring to include students at Case Western Reserve University.