Although labor shortages are not as severe as they were at the start of the year, small businesses are still not taking a break.
“Many small business owners continue to face great challenges hiring and retaining employees,” Holly Wade, executive director of the NFIB Research Centertold Yahoo Money.
Small businesses, those with fewer than 250 employees, accounted for almost 80% of the 10.3 million job openings in the last report by the US 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 large companies, which have about 250,000 more.
“We are a very small retail company hand made Native American art and before the pandemic, it was a challenge to find qualified employees who had intangible qualities such as an appreciation and understanding of art and the creative process,” John Krena, owner of Gallery of the Four Winds in Pittsburgh, Pennsylvania, told Yahoo Money. “But I always had a file of applications from people who wanted to work at the gallery. In today’s environment, this is non-existent.
Despite hiring challenges and lingering inflation, small business operators like Krena have a surprisingly optimistic outlook for 2023, even when it comes to finding new workers.
Competition for new recruits with large companies is tough
Although small businesses can compete with large businesses for new paid workers, they cannot compete on total compensation, including benefits such as employer-provided pension plansand health insurance.
Consider this: Annual premiums for employer-sponsored family health coverage hit $22,463 this year, according to the latest KFF investigation of 2,188 non-federal public and private companies. But workers at small businesses contributed an average of $7,556 per year to those bonuses, $2,000 more than employees at large businesses who paid $5,580.
Three in ten (31%) of covered workers in small businesses are in a scheme where they have to contribute more than half the premium for family coverage, compared to 7% of covered workers in large businesses. And the average deductible for covered workers is much higher in small businesses than in large businesses ($2,543 versus $1,493).
To attract new workers, landlords are increasing applicants’ salaries, Wade said. This is what Bergen Giordani, co-founder with her daughter Morgan Giordani Reamer of A hot cookie in Youngstown, Ohio, did.
“Currently, our starting salaries are on average $2 more per hour than in 2020,” Giordani told Yahoo Money. “Even with this higher starting salary, we struggle to retain new workers. In the past three months, we have hired 4 new full-time hourly employees and only one remains.
Many small business operators have also “lowered minimum qualifications for positions, devoting time and resources to in-house training of new employees, providing more overtime for full-time staff, and increasing the hours of full-time staff. partial when possible,” Wade said.
Keep the faith
Hiring issues aside, small business owners are optimistic for the new year.
Two-thirds of small business owners with less than 100 employees expect their revenue to increase next year, while more than half plan to expand their business, according to a recent report from Bank of America. Just over three-quarters said their business is prepared to survive a recession.
“Small business owners are still struggling with the economic pressures of inflation and supply chain issues, in addition to an anticipated recession, which could impact the cost of their goods and services as well as on their hiring and expansion plans in 2023,” Sharon Miller, president, small business, head of specialty banking and lending at Bank of America, told Yahoo Money. “However, most entrepreneurs are confident their business is equipped to survive a recession and are optimistic about their business outlook for 2023.”
They “plan new marketing initiatives, implement technology upgrades, and devote their time and energy to addressing operational challenges within their control amid ongoing market pressures,” she added.
Giordani is one such bullish small business operator.
“We’ve been blessed with very strong revenue in 2021 and 2022, and I’m optimistic for the year ahead,” she said. “Over the past two years, we have made significant investments in capacity by purchasing a warehouse and building inventory of our non-perishable products to take advantage of price reductions and eliminate problems as best we can. of supply chain. Thanks to this inventory, we will reduce expenses in 2023.”
In addition, One Hot Cookie now has multiple sales channels. In 2020, the mother-daughter duo closed two of their three cookie stores, increased online sales and began operating mobile units to travel to birthday parties and weddings.
To stay afloat, they also took advantage of the federal government’s pandemic paycheck protection program for small business owners, securing around $100,000 combined in the first and second rounds of funding. Additionally, they received a state grant of $10,000 and a county grant of $10,000.
“Next year we will be heavily marketing our mobile units and online sales as we see the most immediate opportunities in these areas,” Giordani said. “I don’t know if we will expand in 2023, but we will explore options for possible off-market expansion in 2024.”
And she hopes to hire more workers, like many of her peers in small businesses.
Seven in 10 small business owners plan to hire new employees in 2023, according to a Bank of America flash survey conducted in late November among a national sample of 534 U.S. small business owners with annual incomes between $100,000 and $100,000. $5 million and employing between two and 99 employees.
Among companies planning to hire in 2023, nearly 6 in 10 plan to offer higher salaries to potential employees than in 2022, and to help retain workers, half plan to raise salaries for current employees. .
That would be nice, if it works.
Kerry is a senior reporter and columnist at Yahoo Money. Follow her on Twitter @kerryhannon
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