May fell short of high expectations, created fewer jobs than economists expected, and underscores the challenges the U.S. economy faces as it tries to restart the workforce after the COVID-19 lockdown.
Small businesses are no exception.
by the National Federation of Independent Business (NFIB) found that May had a record high of 48% of small business owners had vacancies. In addition, 34% of owners said they had to increase the highest value in the last 12 months and 22% more expect it to do so in the near future.
“Small business owners are struggling at record levels to get workers back into open positions,” NFIB chief economist Bill Dunkelberg said in a statement.
“The owners are offering higher wages to address the labor shortage problem. Ultimately, higher labor costs are passed on to customers in higher selling prices, ”he added.
The NFIB data underline how large and small companies are positioned – a dynamic affecting industries across the economy, namely enter a new phase of strong growth after lockdowns.
According to the NFIB, small business owners also have difficulty finding “qualified” people for the positions they are trying to fill – suggesting that the problem is not just quantity but quality as well. According to the report, 32% of property owners cited few qualified applicants for their positions and 25% cited none.
Have to raise prices “sharply”
Still, employers have cited labor shortages as a critical factor in why more jobs aren’t being created – even as the recovery from COVID gains momentum. At least marginally, an additional factor mentioned by some economists .
“We know that roughly one in four workers takes home more money from being unemployed than they earned from work,” Neil Bradley, executive vice president of the US Chamber of Commerce told Yahoo! Finance Live this week.
The turnaround has only just developed in the hiring of hotels, restaurants and other leisure businesses. The job dates for May showed an increase in employment and pay in these sectorsas companies raise wages to rebuild lost workforce.
However, it is still unclear whether the cash increase will be enough to fill the employment gap in the sectors hardest hit by the pandemic.
“It’s important to remember that we had a labor shortage before the pandemic,” Bradley said. “Today as we leave the pandemic, the pandemic has exacerbated some of the underlying causes.”
In addition, the cost of higher wages will most likely be passed on to consumers in the form of higher prices, compounding the sharp rise in prices for a number of goods and services in recent months.
“I have [had] increase my prices significantly, ”said Dale Jackson, owner of Jackson Services Co., a Georgia plumbing and electrical company. “We’re talking 25 to 40% because I have to make up the difference in my overhead.”
Meanwhile, the skill gap has forced business owners like Jackson to think more creatively about how to attract skilled talent. Recently Jackson launched a new incentive: paying a referral bonus to incentivize leads.
“If you know someone who works in our industry … and you can convince them to come for an interview for me and I replace them, I’ll pay you $ 200 a month a.” [for] they work for me every month, ”he added.