The unemployment rate is now at its lowest level since 1969 – and some economists believe it could fall further. It's all great news for the economy. But it's awful news for small business owners like me. That's because finding good people – and paying them competitively – is tougher than ever.
That fact is evident in a recent study by payroll services firm Paychex and IHS Markit, which found that, even in this robust economy, "small business hiring continues to stall," declared James Diffley, chief regional economist at IHS Markit in a statement. The Small Business Employment Watch "dipped slightly again in September, from 99.22 to 99.18, its lowest since 2010." Another payroll services firm, CBIZ, also reported a month-over-month drop in small business hiring of 2.45 percent in September.
Some say that small business owners are just being cautious and remember all too well their mistakes from the last recession. Others blame economic uncertainties like the rising cost of healthcare, volatile markets, tariffs and the still-not-realized benefits of tax reform. But the reality is that most businesses have jobs to fill, but can't hire the people to fill them.
"We are having a hard time finding skilled labor as are the other manufacturers like us," one small manufacturer in Ohio told a local television station. "We're advertising everywhere we can, advertising our benefits. Still having a hard time meeting our needs."
These concerns are echoed by hiring managers in just about every industry across the country, and in the Philadelphia area. Nearly two-thirds of the 111 manufacturers in eastern Pennsylvania, South Jersey, and Delaware surveyed in May said they plan to hire this year, up from fewer than half two years ago, according to a post from the Inquirer's Joseph DiStefano. But many added that reliable, experienced help is getting harder to find. "We're not a sexy business," Patrick Foose, the President of lighting-parts maker GEHR USA in Boothwyn told DiStefano. Foose lamented that there is "a fairly large section of society" in that area of people who never learned or adapted to factory work.
Of course, big corporations like Hershey are having the same challenges. But they've got more resources. Which is why we're seeing Amazon and Walmart announcing wage increases and other firms expanding their benefits, offering more lucrative bonuses, providing better health insurance and increasing their paid time off for employees.
Some small businesses are waking up and paying a little more. In fact, the National Federation of Independent Businesses reported this month reported that a "record" 37 percent of business owners are raising their overall employee compensation.
But let's face it: inflation is low and margins remain tight so it's tough to increase prices or absorb any more costs. Besides, most small companies like mine won't ever be able to match the benefits that their larger counterparts, with deeper pockets and more resources, can afford. Netflix, for example, offers up to one year of paid time off for employees who are new parents. Wow!
So what to do if you're a small business owner? Taking advantage of federal and state training programs, like the ones offered by the Workforce and Economic Development Network of Pennsylvania is a start. Partnering with local technical schools and community colleges is also a good way to uncover young talent.
But to me, the biggest recruiting weapon that we have is staring us right in the face: ourselves.
Working at a small company means greater flexibility, more interaction with the owners and a feeling of really making a difference as opposed to clocking in and out, sitting through meetings, dealing with departmental politics and enduring the HR policies at BigCo.
It's also much less stressful. According to a recent study of more than 3,000 British employees from a wellness firm called Perkbox, companies with fewer than four people had the lowest instances of stress – 45 percent – compared to 65 percent of employees working at companies with more than 500 people.
Paying a little more would help. But a better quality of life could be the best weapon for a small business to compete in this tough labor environment.