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While the labor shortage isn’t as bleak as it was at the beginning of the year, small businesses still haven’t caught a break.
“Many small business owners continue to face significant challenges in hiring and retaining employees,” Holly Wade, executive director of the NFIB Research Center, told Yahoo Money.
Small firms with fewer than 250 employees accounted for 80% of the 10.3 million job openings in the latest report by the U.S. Bureau of Labor Statistics, according to an analysis by Aneta Markowska, chief financial economist at Jefferies. The small business sector has 3 million more job openings than before the pandemic, compared to about 250,000 more than large companies.
“We’re a very small retail operation selling handmade Native American art and before the pandemic it was challenging to find qualified employees with intangible qualities like an appreciation and understanding of art and the creative process,” John Crenna of Four Winds Gallery in Pittsburgh, Pa. told Yahoo! Money. But I always had an application file from people who wanted to work at the gallery. “In our current environment, that doesn’t exist.”
Despite employment problems and persistent inflation, small business operators like Crena are surprisingly optimistic for 2023 — even when it comes to finding new employees.
Competing with larger companies for new hires is tough.
While small firms can compete with large corporations on wages for new hires, they can’t lead on total compensation, including benefits such as employer-provided retirement plans and health insurance.
Consider this: A KFF survey of 2,188 non-federal public and private organizations found that annual premiums for employer-sponsored family health coverage reached $22,463 this year. But workers at smaller firms contributed $2,000 toward those premiums, an average of $7,556 a year, or $5,580 compared to workers at larger firms.
Three in ten (31%) covered employees in large organizations are in a plan that must contribute more than half to family coverage, compared to 7% of covered employees in large organizations. And the average deductible for covered employees is significantly higher at small firms than at large firms ($2,543 vs. $1,493).
Employers are raising wages for applicants to attract new workers, Wade said. That’s what Bergen Jordani, co-founder of One Hot Cookie in Youngstown, Ohio, along with her son, Morgan Jordani Rimer, did.
“Currently, our starting wages are $2 an hour higher on average than they were in 2020,” Jordani told Yahoo Money. “Even with this high starting salary, we’re having trouble retaining new employees. We hired 4 new full-time employees in the last three months and only have one left.
Many small business operators have also “lowered the minimum standards for jobs, allocated time and resources to internal training of new employees, hired more full-time employees overtime and increased part-time employees as much as possible,” Wade said.
Keeping the faith
Hiring problems aside, small business owners are hopeful about the new year.
Two-thirds of small business owners with fewer than 100 employees expect revenue to increase in the next year, and more than half plan to expand their business, according to a recent Bank of America report. Surviving failure.
“Small business owners are still struggling with the economic pressures of inflation and supply chain issues, on top of the expected economic downturn, which may affect the cost of their goods and services as well as their 2023 hiring and expansion plans,” said Sharon Miller, president. , small business, head of specialty banking and lending at Bank of America, told Yahoo! Money. However, most entrepreneurs are confident that their business is equipped to survive the recession and are optimistic about their business prospects in 2023.
“They are planning new marketing initiatives, implementing technology improvements and devoting their time and energy to solving the operational challenges at hand amid market pressures,” she added.
Jordan is one of those energetic small business operators.
We were fortunate to have very strong earnings in 2021 and 2022, and I am optimistic about the year ahead. “Over the past two years, we have invested heavily in capacity by purchasing warehouses and building our non-perishable inventory to take advantage of inflation and eliminate supply chain issues as much as possible. We will reduce costs by 2023 as a result of this inventory.”
In addition, a hot cookie now has multiple sales channels. In the year In 2020, the mother-daughter duo closed two of their three cookie stores, expanded online sales, and began making mobile units to go to birthday parties and weddings.
To get afloat, they received about $100,000 in first and second round funding and took advantage of the federal government’s Pandemic Paycheck Protection Program for small business owners. In addition, they received a grant of US$10,000 and a county grant of US$10,000.
“Next year, we will aggressively market our mobile units and online sales as we see the fastest growing opportunities in those sectors,” Jordani said. I don’t know if we will expand in 2023, but we will explore options that may be out of the market in 2024.
And like many of her small business peers, she hopes to hire more employees.
Seven in 10 small business owners plan to hire new employees by 2023. In late November, a Bank of America Pulse survey of a national sample of 534 U.S. small business owners with annual revenues between $100,000 and $5 million and employed between two and 99 employees. Employees.
In the year Of the organizations that plan to hire in 2023, nearly 6 in 10 plan to pay future employees higher than they did in 2022, and half plan to raise wages for current employees to help retain employees.
It would be sweet if it worked.
Carey is a senior reporter and columnist at Yahoo! Money. Follow her on Twitter @kerryhannon
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