About 45% Of Small US Businesses Are Freezing Hiring Amid Soaring Inflation, Labor Costs
About 45 percent of small business owners in the United States are freezing the hiring of new workers because of high labor costs and skyrocketing inflation, according to the Alignable July Hiring Report.
A competing survey came up with similar results, interviewing 4,739 small business owners, conducted from late June through mid-July.
This is despite 51 percent of small employers still trying to find workers to fill important posts, but the shift in the labor situation this summer has made things more difficult.
The report, released July 21, followed the latest U.S. Bureau of Labor Statistics data showed consumer prices rose 9.1 percent in the past year, the highest in more than 40 years. Meanwhile, the BLS producer price index rose nearly the highest ever at 11.3 percent in the previous 12 months.
“This represents a significant hiring shift, and is largely a reaction to mounting labor costs, skyrocketing inflation, fears of a recession, and rising interest rates,” said Alignable.
The survey found that 4 percent of small businesses were planning to lay off staff and that “some employers noted that they have learned to live without the extra staff, making other changes and/or working longer hours themselves.”
This includes 5 percent of firms in real estate and the automotive industry and 3 percent in retail.
Too Expensive to Hire
Hiring freezes vary across industries and state to state, with 66 percent of gym owners, 63 percent of real estate firms, 38 percent of restaurants, 58 percent of transportation companies, 55 percent of automakers, and 55 percent of retailers reporting a halt.
Some states have more issues with hiring compared to others, while other small businesses are being more selective in trying to hire the right people for the positions, but the majority of business owners believe that it is too expensive to hire right now.
“The top 5 states most affected by the hiring slowdown are NJ (64%), FL (63%), TX (52%), VA (52%), and CA (49%),” reported Alignable, noting that, “3% to 14% of all SMB owners in these states say they’ll be forced to lay off staff, as well.”
Five other states on the list are not far behind, with 48 percent Pennsylvanian, 47 percent of Ohioan, 41 percent of New Yorker, 39 percent of Massachusetts, and 33 percent of Coloradan SMBs implementing hiring freezes.
Only 26 percent of all small businesses reported a full recovery back to pre-pandemic revenue levels, while 60 percent said that their labor costs have increased.
About 18 percent of those employers admitted that wages are now 25 percent higher than they were before 2020.
Managing Without Extra Staff
Finally, some employers noted that they have learned to live without extra staff, making other changes and/or working longer hours themselves.
The website admitted that other poll takers are beginning to take into account the potential negative effects of a looming recession.
The other survey reported that at least 48 percent of small business owners believe that we are already in a recession, and another 32 percent predict one later this year.
The Alignable poll of 5,350 small business employers was conducted from May 10 to July 19.
Sun, 07/24/2022 – 11:30