Report Finds Small Businesses Offering More Flexibility, Higher Wages, New Benefits to Find and Keep Workers
As the worker shortage crisis continues to cause major headaches for small businesses, a new U.S. Chamber and MetLife poll finds that hiring challenges are causing the majority of small business owners to change the way they recruit and retain employees.
According to new data from the Q1 2022 MetLife and U.S. Chamber of Commerce Small Business Index (SBI), over half of small businesses (56%) say they are concerned about recruiting enough new employees to fill open positions, and 57% are concerned about employee retention.
Larger small businesses (20-499 employees), in particular, find employee retention a challenge: they rank employee retention (21%) alongside inflation (24%), supply chain disruptions (25%), and COVID-19 (26%) as their highest concerns.
The struggles that small businesses are experiencing in hiring reflect the reality of a historically tight labor market. The latest data from the Bureau of Labor Statistics (BLS) shows that there are 11.3 million job openings in the U.S., but only 6.3 million unemployed workers.
Small businesses make changes to retain employees
A near record-high of 37% of small businesses surveyed plan to increase staff this year, according to the poll, taken January 14 – 26, 2022. To attract workers amid a shortage of talent, small businesses are offering new benefits and opportunities to recruit and retain workers.
A majority (60%) of small businesses say they have implemented new changes over the past year to improve employee retention, including:
- increasing work schedule flexibility (37%)
- increasing wages (31%) and
- providing employees with more opportunities to learn/grow (29%).
Looking ahead, less than half (48%) of small businesses agree that worker shortages across the country will be resolved in 2022. But most small businesses feel they are well placed to win the war for talent: a majority said their business has a clear plan in place to retain their employees (76%) or find and attract new ones (68%).
What small business owners are saying:
“Utah has performed well compared to other state economies, but the tight labor will continue to put downward pressure on growth.” – Natalie Kaddas, CEO, Kaddas Enterprises based in Salt Lake City, Utah.
“The biggest challenge we’re facing right now is finding ready, willing, and able to work employees in the United States. And it’s not unique to us, it’s a challenge all of our neighbors are facing at the same time.” – Joe Shamess, Co-Founder and Owner, Flags of Valor, based in Winchester, Virginia.
“Rising costs on everything has definitely impacted us… We are diligently working continually to cut back on unnecessary costs and reduce our monthly expenses.” – Bill Rossi, President, Rossi Enterprises based in Chicago, Illinois.
Inflation, supply chain disruptions are other top worries
According to the Index, the vast majority (85%) of small business owners are concerned about the impact of inflation. More than two in three businesses (67%) report having to raise prices to cope with inflation.
One in three (33%) small business owners now rank inflation as their biggest challenge, up from 23% last quarter. Other top challenges include:
- Supply chain disruptions (26%), jumping eight percentage points since last quarter
- COVID-19 safety protocols/compliance (24%)
- Revenue (21%)
- Employee well-being/morale (14%).
Despite the challenges, the current SBI score is 64.1, the highest score since the start of the pandemic. This score is up from last quarter’s score of 63 and the nadir of the pandemic in 2020 Q2 when the score reached a record low of 39.
For more findings from this quarter, and to explore and browse years of small business data, visit https://www.uschamber.com/sbindex/.