Some small businesses are still struggling to hire skilled workers, even as Americans return to the American labor market in large numbers.
Hiring and retaining employees is the number one challenge facing small businesses, according to a Goldman Sachs survey of 10,000 Small Business Voices from 1,100 companies conducted last week. Ninety percent of recruiting companies struggle to recruit qualified candidates for open positions.
In general, the US job market is on fire. An unexpectedly strong recovery from the short but devastating coronavirus recession has prompted companies to recall and hire new employees they laid off in spring 2020. Last year, American employers added more than 540,000 jobs per month on average. According to FactSet, the Labor Department is expected to report on Friday that employers hired an additional 396,000 over the past month.
But small business owners believe the job market is a tale of two recoveries. Eighty percent of respondents to a Goldman Sachs survey say small businesses are struggling in their local communities compared to larger companies. Forty-two percent say they have lost employees at larger companies that pay more.
“Small businesses struggle to compete with large employers on pay and benefits and cite shortages of skilled workers,” said Joe Wall, national director of Goldman Sachs 10,000 Small Business Voices.
Data from payroll company ADP shows a large gap in hiring for companies with 500 or more employees and companies with fewer than 50 employees. These small businesses have lost jobs in three of the last four months.
In March, employers posted a record 11.5 million job vacancies. In the United States there are now two job opportunities for every unemployed person. But a large number of small businesses say they are struggling to find candidates for open positions, particularly in the hard-hit leisure and hospitality sectors. The owners themselves are doing more and improving other ways to achieve something.
“I’m scared of burnout. … It’s frustrating, very depressing,” said Shirley Hughes, owner of Sweet Cheats Bakery in Atlanta.
Sweet Cheats had nine employees at the height of the pre-pandemic. Now Hughes himself has two pluses. She has reduced her working hours – closing times from 8.30pm to 6pm and now 4pm – so that she and her two bakers can have more time in the kitchen. Despite this, Hughes says she now works 80 to 90 hours a week.
Inflation is another challenge. High spending not only affects companies’ bottom lines, but also affects their ability to retain and attract employees. Before the pandemic, Hughes would get hundreds of applicants to open. Now, she says, she’s lucky enough to have one or two, and they want $18 or $20 an hour, while she’s offering experienced bakers $14 or $15.
Hughes had to add benefits for his two long-time collaborators to stick with him.
Teresa DePola herself is overworked due to the lack of support available. She opened Betty Boops Diner in Albany, New York with her husband and son 10 years ago and has continued to run it after she and her husband divorced.
While ideally she would have three employees to run the place, until recently she was a one-man workforce: cooking, waiting tables and even doing deliveries.
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“It’s small enough for me to do it myself, it’s not bad,” she said. Still, she would like to hire some staff so she can serve dinner again. It has only been serving breakfast and lunch since the start of the pandemic and closes at 3pm. And she doesn’t see an improvement in the job image anytime soon.
“I don’t think that’s going to change for a while,” she said. “I’m going to leave it as it is now, people just aren’t ready to work. I still have big problems finding staff.”
Most major U.S. industries have regained jobs lost to the pandemic, with leisure and hospitality employment down 1.5 million, or 8.7%, since February 2020, according to the Bureau of Labor Statistics.
Rob Wilson, president of staffing firm Emploco, said many people in the industry were facing burnout after being on the front lines during two years of the COVID-19 pandemic. Some who stayed in the industry moved to larger restaurants where wages could be higher. Others left and looked for new opportunities.
“There’s nobody for rent, nobody out there looking for a job,” said Anesh Bodasing, who opened Tiffin Box, an Indian fast food restaurant in West Palm Beach, Florida, in 2019 with 20 employees.
Last year in April 2021, Bodasing temporarily opened a second location in a food hall. But then the staff shortage began to hit the house.
“Your staff numbers have gone down and you pay people who pay. From an employer perspective, that’s the wrong equation,” he said.
Bodasing closed the concession stand and the West Palm Beach location has shrunk to three employees. He is considering reorganizing the business to employ fewer people.
“Assuming job shortages don’t change,” Bodasing said. “You can sit and fight or you can turn and turn the business around in a way that keeps us moving forward even in times of scarcity.”
One option is to replace the cashier’s position with an automated kiosk where customers can order and pay. Another possibility: Introducing meal planning, where customers order at least five meals in advance to eat or freeze.
“You just have to think outside the box; literally nothing is off the table,” he said.
Matt Ensero, founder of Wing It On! Chicken Restaurant, the company’s two corporate restaurants in Waterbury, Connecticut and Raleigh, North Carolina, faced the challenge of maintaining a staff of 35 people. (The chain also has nine franchise locations, with more in development.)
“We thought this is pervasive in our industry, we need to change our strategy,” he said. Ensero realized it was competing with other restaurants to get applicants — people set up an interview and then didn’t show up 90% of the time. So the chain started giving people a free lunch or dinner when they showed up. The ratio “tipped over,” he said, and most applicants came for interviews.
Meanwhile, at its Raleigh location near North Carolina State University, the company began offering stipends to workers: $1,000 if they worked a full year or $500 if they worked a semester. The program has been successful, and the company plans to increase the amount to $2,000 next year for full-time employees.
“It’s not a given now that you can post an ad and people come through the door and you hire them,” Ensero said.
This article has been corrected with the correct spelling of Matt Ensero’s last name.