The numbers: Small-business owners say they are losing sales because they can’t find enough people to fill open jobs. And now rising inflation is adding to their worries.
A closely followed small-business index fell slightly in May to mark the first decline of the year, according to the National Federation of Independent Business. The index slipped 0.2 points to 99.6.
The NFIB, the nation’s largest small-business lobbying group, said a record 48% of small businesses surveyed could not fill open jobs, even with many of them offering higher pay.
“The labor shortage is holding back growth for small businesses across the country,” said NFIB chief economist Bill Dunkelberg. “If small-business owners could hire more workers to take care of customers, sales would be higher and getting closer to pre-COVID levels.”
Higher inflation is also adding to the costs of small businesses and making it harder for them to plan ahead, the survey showed.
Big picture: Large and small businesses alike complain it’s hard to find qualified workers despite a still elevated unemployment rate and millions of people out of work because of the pandemic. They say it’s holding back an even stronger U.S. recovery.
The complaints have stoked a national debate over whether extra unemployment benefits from the federal government are discouraging people from going back to work. Nearly 25 states, all of them led by Republican governors, plan to end the extra benefits by early July to nudge people to rejoin the labor force.
Critics contend that companies instead ought to increase pay to attract workers. Some one-third of small businesses say they’ve already boosted compensation, however, and about one-fifth say they plan to do so in the next few months. Government figures show that wages have risen sharply in the past few months.
Economists say a wave of early retirements, a lack of child-care options and lingering fear of the coronavirus join generous unemployment benefits in explaining why more people haven’t returned to work. These problems probably won’t clear up at least until the fall, they say.
Key details: A quarter of small businesses said finding job candidates with the right skills was their biggest problem.
The ones that have raised wages in an effort to lure more workers say they plan to pass higher labor costs on to customers, potentially adding upward pressure to U.S. consumer prices.
The percentage of businesses raising prices rose to the highest level since 1981.