Rising salary costs present more challenges for small businesses
As pandemic restrictions loosen, small business owners are discovering an incredibly competitive talent market as workers rethink their careers and work expectations, according to a new survey from Prudential Financial.
According to the Pulse of the American Worker Survey, a quarter of workers plan to look for new jobs after the pandemic ends. Half of those polled said the pandemic has given them more control over deciding their career direction, and 48% are completely rethinking the type of job they want. Half of workers who are considering leaving their jobs say they are looking for better pay and benefits. They also prefer a job that allows professional growth as well as a better work-life balance.
A survey of 2,000 full-time adults, conducted by Morning Consult on behalf of Prudential, found that computer technology and tools to enable remote work topped the list of most needed skills according to managers.
In many industries, workers could seamlessly switch to remote work. However, for restaurants and hotels and for personal service businesses including barbers, nail salons and spas, having employees work remotely is not an option. In addition, the pandemic highlighted the difficulties of active caregivers, who represented 38% of those questioned. The strained balance caused by the pandemic has led to an exodus of caregivers from the workforce, with women being disproportionately affected, according to data reported by the Bureau of Labor Statistics.
The National Federation of Independent Businesses (NFIB) found that a record 48% of small business owners reported unfilled job vacancies. by 22%
“Small business owners are struggling at record levels to try to get workers back to vacant positions,” said Bill Dunkelberg, chief economist for the NFIB. “Homeowners are offering higher wages in an attempt to address the labor shortage problem. Ultimately, the higher labor costs are passed on to customers.
The NFIB reports that 61% of owners said they hired or attempted to hire in May. The owners intend to fill the vacancies with a seasonally adjusted net of 27% expecting to create new jobs over the next three months. More than a third (34%) of small business owners) reported increasing their compensation and more than one in five (22%) owners plan to increase their compensation in the next three months.
Additionally, the majority of small owners said hiring attempts reported little or no “qualified” applicants for the positions they were trying to fill in May. Thirty-two percent of owners reported few qualified candidates for their position and 25% reported none. Business owners cite higher labor costs overall and a lack of quality labor as their top business concerns. For example, in the construction industry, where 51% of job postings are for skilled workers, more than 6 in 10 companies (61%) reported few or no qualified candidates.
According to some in the employment placement industry, the problem lies in the amount paid to workers as unemployment benefits. If the unemployment figure exceeds the amount a person earns when they actually work, there is little or no incentive to return to work.
“It is a complex problem created by Congress. When benefits run out, people will expect them to earn when they are unemployed. The extra $ 300 will be gone, ”said Jeff Kowalczyk, president of Connections Personal, based in Scotch Plains, New Jersey. “You’re going to have a workforce that expects a level of pay that it won’t get. I do not blame the workers. Jobs were once high on people’s list of priorities, now they depend on government. Some people haven’t worked for over a year.
“The rising cost of labor and the shortage of workers – this is absolutely the result of the stimulus,” added Kowalczyk, who has worked in the employment sector for three decades. “They didn’t think of small businesses when they drafted the law. Large businesses can set up kiosks and cash machines, small businesses cannot. They suffer. “
Kowalczyk believes wages will eventually drop when unemployment benefits end and labor supply increases. His advice is that people return to work before benefits end and thus find a job before others even start looking.
There are approximately 31.7 million small businesses in the United States, and these businesses create 1.5 million jobs annually and account for almost two-thirds (64%) of all new jobs in the economy. Among small businesses, 46% have 1 to 5 full-time or part-time employees. If the labor shortage persists and unemployment benefits are extended even longer, many small businesses will be unable to hire the workers they need and will still operate profitably.