Trendspotting: Small Businesses Struggle to Fill Jobs

NewsWire: 4/21/21

• A record share of small businesses say that they have jobs that they can’t fill. Nearly all of those surveyed also said that they had received few or no qualified applicants for open positions in recent months. (NFIB)
• NH: In the March NFIB jobs report, 42% of small businesses said they were struggling to fill jobs. That is the highest reading ever. And it is a colossal +20 percentage points higher than the average monthly reading since 1974. 
• With a number like that, you'd think that the labor market is white hot and unemployment is hitting record lows. But no. Despite these job openings, the unemployment rate is still stuck at 6%. So why are so many positions unfilled?
• IMO, there is a mismatch in expectations.
• Many small businesses finally have enough traffic to cover a modest wage--say for an extra cashier or server or aisle stocker. And many owners believe the relatively high unemployment rate should make this a buyers market for employers.
• But from labor's perspective, there is still a risk in returning to work. Many unemployed young adults are still unvaccinated. And generous stimulus measures enable them to postpone finding a job. Most unemployed households just received $1,400 stimulus checks. Congress has guaranteed an additional $300 of weekly jobless benefits through the beginning of September. And there is still a moratorium on evictions. Remember, we are living in an economy with lots of cushions. 
• So how will this play out going forward? Eventually, most Americans will get their shots. Households will spend down. The stimulus will end. And job seekers will have to get serious. In the meantime, businesses wanting to hire will have to raise wages--and choose between higher prices or smaller margins. Many owners will have to get creative and work out special deals (bonuses, flexible hours) for job seekers or invest more in training new talent themselves.
• In the most recent survey, 28% of owners said they raised compensation, the highest share in the last 12 months. My expectation: That number will keep rising for a while.