In the US alone, labor shortages shot up in 2021 as small businesses struggled to find the manpower they needed. Job opening positions reached 48% by the turn of May, an all-time high in nearly 47 years, according to the NFIB Small Business Economic Trends survey. As if that isn’t enough, about 60% of small business owners reported losing over 20% of their labor by 2021, which affected their operations. Indeed, 19% of these businesses indicated that such labor shortages come with serious business losses. That means the massive increase in job openings coincided with a huge labor shortage, which is paradoxical.
Unfortunately, the labor shortages do not have any end in sight. According to Alignable’s Small Business Labor Poll, 60% of 6,367 businesses claimed that current labor shortages still plagued them. Even worse, this issue of a labor shortage isn’t limited to just one or few industries; it cuts across a different range of sectors. In fact, according to a Goldman Sach survey, 97% of small businesses looking to hire new workers claim that the recruitment process, labor shortage, and labor retention efforts are hurting their bottom line. The most-hit industries appear to be the consumer-facing ones, with businesses like restaurants and retail outlets reportedly increasing salaries in a desperate effort to attract new workers.
So, what is responsible for this labor shortage? Known as the great resignation of 2021, many workers opted to quit their jobs for various reasons. The COVID-19 pandemic is the main catalyst, causing widespread job losses across the US and indeed globally. But while the job losses started the previous year in 2020, July 2021 saw about 4 million Americans quitting their jobs. Many experts have suggested that the biggest cause of the great resignation is probably the large number of job openings tied together with a lower unemployment rate that followed.
Another major cause of the labor shortage is the shrinking number of working-age people. A 2020 report suggested that the number of workers falling between the ages of 16 and 19 had declined by 0.1%. Although this looks insignificant, the worry here is that this number has dropped for the first time in decades. Additionally, the number of skilled workers most small businesses need has also dropped.
Regardless of the causes, the labor shortages have proven catastrophic for many small businesses. 59% of all retailers and 66% of restaurants claim they cannot get enough labor assistance. In the caregiving industry or senior care sector, about 92% of small business operators also claim to be experiencing short-staff problems.
Despite the current labor shortage struggle, small businesses can make some important changes to minimize the adverse impact of being short-staffed. For example, small business owners can use their website design to enhance their online recruitment strategies to attract the top talent they need. Businesses can also try enticing prospects by promising flexible working schedules and remote working, as these have been one of the demanded features of the modern job seeker. But most importantly, workers want to feel safe, in fear of the coronavirus. Therefore, small businesses must improve workplace safety to reassure prospects that their health is secure.