When small business owners try to recover and rebuild after the Covid pandemic, they face a new hurdle: labor shortages.
A survey by the National Federation of Independent Business in March found that 42% of owners had vacancies that could not be filled, a record high. Ninety-one percent of those hiring or looking to hire said they had few or no qualified applicants for the positions they were trying to fill.
For many small businesses, this is a huge barrier to growth, said Holly Wade, executive director of the NFIB research center.
“They made it to this point and adjusted their business operations to weather the worst of the pandemic. Now they are tired of not being able to grow business when they find the opportunity,” she said.
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The reasons vary: potential workers may not be vaccinated, and some working parents continue to face a lack of childcare or personal schooling for their children. Restaurant workers may be reluctant to return to the frontline and risk getting Covid-19.
Others may have moved out of the area or found a new way to make money. Then there is the additional $ 300 weekly unemployment insurance policy, which may also deter people from taking a job, the owners have said.
These statements are among those that Matt Glassman, co-owner of The Greyhound Bar & Grill in Los Angeles, has heard from former employees who decided not to return when it reopens this week. Its two sites have been closing since last June after Glassman and co-owner Steven Williams signed Covid and decided it wasn’t worth the risk of reopening until vaccines were available.
While Glassman wanted to keep as much of his original staff as possible, he understood why those who didn’t return made their choices.
Steven Williams (L) and Matt Glassman (R) recently reopened the Greyhound Bar & Grill in Los Angeles after being closed for over a year.
Since its locations are only about a third full due to social distancing rules, employees with tips such as bartenders and waitresses are affected. Bartenders make about 75% to 80% of their wages by tipping, he said.
“They are taking a massive cut in wages through no fault of ours and no fault of theirs,” said Glassman, who has borrowed from the Paycheck Protection Program and recently applied for assistance through the Small Business Administration’s Restaurant Revitalization Fund.
Hiring new workers has been the most frustrating, according to business owners.
“Finding new employees is a skill that didn’t exist 16 months ago,” said Glassman, 39, and former bartender.
“We had an incredible number of people who scheduled an interview and didn’t show up,” he added. “We have never had this problem before.”
However, small businesses have a long recovery ahead of them. Confidence is slowly rising, now at 45 in the current quarter, after a record low of 43 in the first quarter, according to the Small Business Confidence Index in the latest CNBC | SurveyMonkey Small Business Survey.
I often suggest that when someone says, “I can’t find the workers I need,” they really should add, “to the wages I want to pay.”
Senior Economist and Director of Policy at the Economic Policy Institute
The hiring is also expected to increase. According to the survey, 25 percent of owners expect their number of employees to increase in the next year. You can find job vacancies on free sites like Indeed and local Craigslist ads. Restaurant workers can also check CulinaryAgents.com.
While business owners complain about the lack of available labor, Treasury Secretary Janet Yellen has privately warned of overreaction, according to the Washington Post, which cited two sources speaking on condition of anonymity. Yellen argued that it would take more time and data before assuming there was a problem in the economy, the paper reported.
Heidi Shierholz, Senior Economist and Director of Policy at the Economic Policy Institute, doesn’t believe there is a widespread labor shortage. For one, wages are not rising rapidly, indicating a tight labor market and booming employment growth, she said in a recent statement from the Policy Dialogue Initiative.
Regarding the $ 300 unemployment benefit that keeps low-wage workers out of jobs, she points to research that found an extremely limited effect of last year’s $ 600 weekly benefit in discouraging workers.
Instead, the labor shortage may have to do with employers failing to raise wages, she argued.
“Employers post their wages that are too low, cannot find workers to fill jobs at that wage level, and claim they are facing a labor shortage,” she wrote. “Given the ubiquity of this dynamic, I often suggest this when someone says,” I can’t find the workers I need, “they should really add,” to the wages I want to pay. “
However, many small businesses argue that if they are not making money, they cannot pay higher wages. According to the NFIB survey, as early as March 28% of small business owners said they would increase their compensation.
“If I could pay every single person in this place more to come back and feel safe, I would,” said Glassman, who was just giving his staff increases. For example, his bartenders and waiters make $ 15 an hour before tips. He was having a hard time finding a manager for $ 17 an hour and a dishwasher for $ 16 an hour.
“I would definitely like to give everyone a massive raise to make me feel safer and more loved,” he added.
“At the moment we don’t know where the money is coming from.”
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