According to the National Federation of Independent Businesses (NFIB), half of US small-business owners said they had open positions they couldn’t fill this June. But look at it this way: that’s better than May 2022, when it was more than half. That, by the way, was a 48-year record high.
Sure, inflation is eating our lunch, and we may be on our way to a recession, but workers still aren’t coming into the workforce. Instead, we’re still suffering from a Great Resignation hangover.
Some businesses are bending to the headwinds of inflation, a nearly strangled supply chain, and low consumer confidence. Companies such as Netflix and PayPal have started layoffs, while Microsoft is slowing down its hiring “to better align its resources,” and Meta (Facebook) and Twitter have frozen hiring in some departments. Friends in the know tell me that other Fortune 500 companies are getting ready to either lay off staff or freeze hiring.
But for small businesses, it’s another story.
Indeed, if the big boys lay people off, many small businesses would be overjoyed to bring these people on board. As NFIB Chief Economist Bill Dunkelberg said, “the labor shortage continues to be a difficult problem for small businesses.”
You can say that again.
In Asheville, NC, where tourism drives the city’s service-based economy, I don’t know of a single business with as many employees as it would like. The problem here is that Asheville is also a costly city to live in.
Service jobs and high living costs are a lousy pairing for employment.
The answer has been to push up wages. But we’re not alone.
According to the NFIB, 48% of owners reported raising compensation. That’s down one point from May but only two points below January’s 48-year record high. In addition, 28% of small business owners plan to raise compensation in the next three months, up three points from May.
This is absolutely necessary.
Your workers need all the money they can get. The average rent across the country has crested to above $2,000 for the first time ever.
Remember that the usual budgeting rule of thumb is that rent should be no more than 30% of your monthly income before taxes. In other words, your employees need to make close to $80,000 a year just to make their rent.
That’s mind-boggling. But the numbers don’t lie.
This also points out to me that one big reason would-be employees aren’t rushing to your door is that you’re not offering enough money. Combine this with the fact that by the Federal Reserve Bank of St. Louis’s count, the aggregate hours worked, which includes both the number of workers and the length of the workweek, is now up 4.6% year-over-year. So we know that even though some workers have returned, it’s still not enough.
That tells me that those who have shown up are working their rumps off.
Hard work and not enough money — that’s not a good combination to get people to apply for a job.
Sure, there are other factors.
According to Boston Consulting Group, a global study of non-white-collar workers found that as many as 37% were looking to quit within the next six months.
That’s just what you don’t want to hear.
So if you’ve been thinking the Great Resignation is all about office or technology workers, think again.
While office workers and others who can work from home cited concerns over flexibility (28%), work-life balance (22%), and simply being unhappy (15%) as the top reasons they would consider quitting, money (30%) ranked higher.
Some 41% also want advancement opportunities — which, to me, is code for “more money.”
In a global survey conducted by PwC in March, one in five respondents said they are “extremely or very likely” to switch employers in the coming year.
And what are these people looking for? Surprise! At the top of 71% of workers’ lists is money.
To make money, you need to spend money. And in 2022, to get enough qualified employees, you must increase your salaries. It’s that simple.
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