Small businesses are a crucial source of jobs in the US, but many have slowed down their hiring in response to shifts in the economy and rising wages. This trend is reflected in a recent survey conducted for The Wall Street Journal, which found that the portion of small-business owners who expect to expand their workforce over the next year was below 50% for the second month in a row in May, hitting the lowest level since June 2020, Ruth Simon (WSJ) highlights.
Dion Rabouin (WSJ) highlights that the surge in hiring by American small businesses could run afoul of the Federal Reserve’s efforts to cool inflation. Small companies have been responsible for all of the job growth in the US since the onset of the Covid-19 pandemic and account for almost four out of five available job openings (Rabouin). However, this trend is not necessarily a bad thing. In fact, it could be a sign that small businesses are optimistic about the future and confident in their ability to grow. Despite the slowdown in hiring, small businesses remain a crucial source of jobs in the US. While some companies have slowed the pace of hiring due to concerns about an economic slowdown, the demand from small businesses for new workers has not yet shown signs of declining.
It's also worth noting that the availability of workers has improved slightly in recent months, according to some reports. This could be due to a variety of factors, including workers returning to the workforce as pandemic-related concerns ease and wages increase as employers compete for talent.
Overall, while many small businesses have slowed down their hiring, they remain a crucial source of jobs in the US. As the economy continues to recover from the pandemic, it will be interesting to see how small businesses adapt and grow.
While the short-term implications for the labor shortage on small businesses may seem little now, what are the long-term implications? For one, loss of sales: Over 80% of small businesses reported a loss of sales due to the labor shortage, with 19% experiencing serious losses. Additionally, the loss of profits. 97% of small businesses seeking to hire new workers said hiring and retaining their workforces is hurting their bottom line. Solving the labor shortage problem will take time, and it will be interesting to see how small businesses adapt and grow in response to this challenge. Sources:
https://www.wsj.com/articles/workers-are-still-needed-but-many-small-businesses-have-slowed-hiring-dfa30be6
2 comments:
It seems like labor shortage is an important aspect of this hiring shortage among US Small businesses. The fact that it is at its lowest level since 2020 when the pandemic is hitting its hardest is concerning for economic growth in the future. US Small business is an integral part of the US economy, hiring around 1.5 million annually and driving 44% of US revenues. This sector would need to continuously get support from the government to see any near-term growth in the future. 2/3s of American labor is focused in Small Business and innovation is a major component of the industry. Although the sector seems to be declining, it is also a large business in the US that has been growing exponentially. Conglomeration has been very common in the post-pandemic economy and industry giants continue to stamp out competition at an astonishing rate. The federal government might need to get involved, as it can offer certain protections in the fiscal and legal realms from these large organizations.
https://advocacy.sba.gov/2019/01/30/small-businesses-generate-44-percent-of-u-s-economic-activity/
Labor shortage has been an issue in small businesses. I believe this trend will continue and then reach a carrying capacity. During the 2020 COVID-19 pandemic, there was a mastic drop in economic growth. The government spent 4.6 trillion dollars in costs due to the pandemic according to USAspending.gov. Working at home became a necessity. Alternative jobs like home jobs are convenient and some can pay better than working for a small business. Additionally, new artificial intelligence lowers job demand as a computer is cheaper than hiring a person and paying them hourly. This makes employers more selective in who they hire. To add to job selectiveness, youth are careful to where they work to build their resume.
https://www.usaspending.gov/disaster/covid-19?publicLaw=all
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