- The National Federation of Independent Business found a record 44% of small businesses have openings they can’t fill.
- Also, 36% of owners reported raising their selling prices – the highest reading since 1981.
- Experts say some workers in service industries might never return to the pre-COVID economy.
- See more stories on Insider’s business page.
Last week’s jobs report fell significantly short of expectations, adding just 266,000 jobs to the US economy when economists had predicted 1 million.
Small businesses are no exception.
The National Federation of Independent Business (NFIB), the nation’s largest small business association, released a report on Tuesday that found that while small business optimism increased by 1.6 points since March, a record 44% of owners reported job openings that could not be filled in April. Also, 36% of owners reported raising their selling prices – the highest reading since 1981.
“Small business owners are seeing a growth in sales but are stunted by not having enough workers,” NFIB Chief Economist Bill Dunkelberg said in a statement. “Finding qualified employees remains the biggest challenge for small businesses and is slowing economic growth. Owners are raising compensation, offering bonuses and benefits to attract the right employees.”
The report said the labor shortage can be attributed to small business owners having to compete with the government’s increased $300 weekly unemployment benefits, along with the pandemic keeping some workers out of the labor force due to health and personal concerns.
Insider reported in April that while the Bureau of Labor Statistics found 9.7 million Americans were actively looking for work, businesses were also reporting significant labor shortages.
Kristen Broady, an economist at the Brookings Institution, told AP News that the economy has changed as some businesses have allowed their workers to continue working from home, at least for part of the week, likely hurting restaurants, coffee shops, and other businesses of that nature.
“When you think about those people,” Broady said, “their work circumstances may never go back to pre-COVID.”
NFIB also said that 24% of owners cited labor quality as their top business problem, which Caren Merrick, CEO of VA Ready, a Virginia-based job training program, said could be a self-created barrier.
“Some companies have barriers themselves that prevent them from hiring the people that they need,” Merrick told AP. “They need to make a greater effort.”
President Joe Biden announced on Monday that he is reinstating a pre-pandemic policy that Americans receiving unemployment benefits must either take a job that is “suitable” or lose their unemployment benefits to encourage people to get back into the workforce.
While Biden said that “we don’t see much evidence” of unemployment benefits hurting job growth, his comments suggested he was listening to GOP criticism on the issue: that the benefits are disincentivizing people from returning to work.
But he added that “22 million people lost jobs in this pandemic through no fault of their own,” including small businesses.
“I think that people who claim Americans won’t work, even if they find a good and fair opportunity, underestimate the American people,” Biden said. “So we’ll insist that the law is followed with respect to benefits, but we’re not going to turn our backs on our fellow Americans.”
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