For more than a year, small business employers have struggled to fill open positions. And while 51% are still trying to find workers for those posts, there’s been a significant shift in the labor situation this summer.
Now, 45% say they’ve put any hiring on hold, largely because of high labor costs and skyrocketing inflation, and an average of 4% say they’re starting to reduce their staffing to improve the financial health of their businesses.
To further illustrate the economic landscape contributing to this situation, only 26% of all SMBs tell us they’ve fully recovered to pre-COVID revenue levels, and 60% say their labor costs have increased. 18% say wages required by workers are now 25% higher than they were before COVID.
This news comes from Alignable’s July Hiring Report, released, based on a poll of 5,350 small business employers conducted from 5/10/22 to 7/19/22.
Beyond responding to labor costs and inflation, several poll takers also noted that they’re bracing for the negative effects of a potential recession. In a related survey of 4,739 small business owners, conducted from 6/23/22 to 7/19/22, 48% said they believe we are already in a recession, and another 32% predict it’s coming later this year.
Finally, some employers noted that they have learned to live without the extra staff, making other changes and/or working longer hours themselves.
Hiring Freezes & Layoffs: More Common In Key Sectors
Here’s what small business employers in the following industries told us regarding their hiring situation right now:
- Gyms: 66% have hiring freezes in place.
- Real Estate: 63% of firms are not hiring this summer and 5% of that group are instituting layoffs. Rising interest rates and a lack of inventory are two reasons behind this change.
- Transportation: 58% are not hiring right now.
- Retailers: 55% have ceased hiring, and 3% are also letting workers go.
- Car Dealers/Repair Shops: 55% have put a hold on hiring, and 5% are implementing layoffs.
- Finance/Accounting Firms: 54% say they’ve stopped hiring now.
- Dentist Offices: 50% are not hiring.
- Plumbers: 50% have stopped hiring, and, of that group, 6% are starting to lay off workers.
- Law Firms: 45% have stopped hiring for now.
- Construction Companies: 42% are no longer hiring, and 4% are also letting people go. (Some poll takers noted that investment in new construction is starting to slow down, because of recessionary fears).
- Restaurants: While many are still trying to fill open positions, 38% say they can’t currently afford to add workers, and 4% feel compelled to reduce their headcount just to stay in business.
- Beauty Salons: 34% tell they’ve put a hold on hiring for now.
Effects Are Even Higher Among Minority-Owned Firms
Examining the demographics of our poll takers, it can be seen, yet again, that disadvantaged, small firms are having an even harder time with this latest chapter of the hiring crisis.
58% of minority business owners said they must implement a hiring freeze right now to help their chances of staying afloat.
More than half of the women-owned companies (51%) polled are not hiring right now, along with 45% of nonminority-owned firms, and 40% owned by veterans.