Are Unemployment Benefits Crushing Small Business?
In a recent poll, half of you said you were struggling to find employees—and you’re not alone. A growing labor shortage is pummeling industries, from restaurants to retail, manufacturing to healthcare. And it’s putting a damper on revenue and recovery as a whole.
With so many open jobs and so few applicants, the question is: Why?
There’s no doubt that the extra unemployment benefits and stimulus offered by the federal government are a factor. In last week’s poll, 54% of you agreed. So does the Chamber of Commerce, who blamed the poor jobs report on the extra assistance. It might be time for the government to step back and get out of the way.
So, just how bad is the worker shortage and how is it hurting you and small businesses around the country? And what role do the additional unemployment benefits play in it? Let’s take a look.
Hiring is Hurting and Small Business is, Too
Here’s how big of a problem the shortage is now, according to governmental data and what you shared in our recent polls.
Alarmingly fewer jobs added than expected
Many economists were predicting a huge uptick in added jobs in April—around one million. But the real amount was almost a quarter of that, with a payroll increase of only 266,000 nonfarm jobs, according to the jobs report.
But plenty of jobs are available
There are, however, more jobs available than ever. There were 8.1 million job openings at the end of March, a record high.
Extreme difficulty filling positions
So there are less jobs being filled and more job openings than ever, which means hiring for open positions is a major headache. In one of our recent polls,
- 50% of you said you can't find enough people to fill open vacancies.
- When you do fill the roles, 51% of you have to pay more than you were pre-pandemic.
Devastating Effects of the Labor Shortage
We finally have the means and customers to recoup what we lost and have to turn away business because we can't get anyone to work.
So how is the hiring difficulty holding real businesses back? Here are some devastating circumstances from members like you.
“We are a small to medium HVACR company in the northwest suburbs of Chicago and are struggling to hire at least one new employee. We need two in the near term and are having no traction,” says Don Cook from Cooks Heating and Cooling Co.
“Finding employees has never been so difficult. We have the work now, the wages are high, and there is little to no interest,” says Deborah Whalen from Molly Maid of Cary & Johnston County.
“We finally have the means and customers to recoup what we lost and have to turn away business because we cannot get anyone to work,” says Bruce Sherman of Trains on the Move.
“We use independent contractors to fill our private duty case. ...We end up having to charge more to get a caregiver to take a case, which hurts the families we serve. …It has gotten 100% harder to fill cases than it was before COVID. We always get it done, but it is much more challenging than it used to be,” says Leslie Sedille from Paradise Home Health Care.
What Role Do the Extra Unemployment Benefits Play?
So why is there a labor shortage in 2021 in the first place? The top reason, according to those of you in the retail and restaurant industry, was the $300 supplemental unemployment amount. Nearly a third of you pointed to this as the cause of your hiring shortage.
Though it’s a complex issue, there’s no denying that government support (the extra unemployment benefits and stimulus payments) are major contributing factors.
“We find it difficult to employ factory production workers because of government top-ups. Workers can make more money sitting at home,” says John McGrather from JEM Strapping Systems Inc.
“We can’t keep paying people not to work...We can’t recover without getting people back to work,” says Bill Achor from York Ag Products Inc.
And the Chamber of Commerce agrees. In their statement, they clearly state what they believe is causing the issue and what should be done about it.
The disappointing jobs report makes it clear that paying people not to work is dampening what should be a stronger jobs market.
“The disappointing jobs report makes it clear that paying people not to work is dampening what should be a stronger jobs market. …One step policymakers should take now is ending the $300 weekly supplemental unemployment benefit.”
In fact, many states will be withdrawing from the program in the next month or so, ending the $300 added benefit as a way to incentivize people to go back to work. That list includes: Missouri, Wyoming, Idaho, North Dakota, Tennessee, Mississippi, Alabama, Arkansas, South Carolina, and Montana.
What Other Reasons Might Be Causing the Shortage?
People cannot ‘sit home’ and collect unemployment… The truth is people are sick of being described as ‘workers’ and have lots of options.
There are likely multiple reasons for the shortage that span beyond the extra unemployment payout. Recent media coverage points to things like:
- Workers not feeling safe enough to return to the job
- Limited childcare options forcing women to stay home
- A reevaluation of values causing people to go new directions in their employment and lives
- A desire for more livable wages
- Pandemic restrictions preventing businesses from hiring foreign seasonal employees
“People cannot ‘sit home’ and collect unemployment… The truth is people are sick of being described as ‘workers’ and have lots of options—no more low wages, punitive management, and no healthcare,” says Monica Pursley from Western Revenue Services.
“We need community outreach for the workforce—without knowing what exactly is keeping those who are able to work from applying for jobs, we won’t fully recover for a very long time,” says Melissa Blair from Pawsitively Professional Pet Services.
“If your business cannot afford to pay a living wage, it either should be owner run or not be a business at all. Expecting people to live below the poverty line and leaving it up to the taxpayer paid social assistance programs to make up the difference is just wrong!” says Chris Cooke of The Mailbox Shipping & Receiving.
Your Turn: Is Government Support Holding Small Business Back?
After seeing the data and reading a few perspectives, what do you think? Is government support stalling recovery? Is it time to end them? Or are there other changes that would more meaningfully impact recovery?
Weigh in below and share how the hiring shortage is affecting your business.
Have hiring questions or want to talk this out with others like you? Join the hiring group to kickstart the conversation now.
For more data-backed insights from members like you, check out these reads:
Comments (41-50)
There is no shortage of workers. People who want to work are out there. The "problem" is that workers have become aware of their value and want to be given a safe working environment and a reasonable living wage. It's a matter of supply and demand...they know they are in demand, so they can hold out for better pay and working conditions. The problem for small businesses is that many of them are struggling to stay afloat and just cannot compete with the pay scales of huge corporations. I can't afford to pay $15-20 an hour for help, so I end up doing it all myself. I don't know what the answer is, but assuming that workers are just lazy and selfish isn't helpful.
If you're offering wages below what people are receiving for unemployment compensation, you're not paying enough. The other factors are important, like the continuing pandemic, lack of childcare opportunities, etc., but in Richmond we have an unemployment rate of less than 4% and a poverty rate of 25. Do the math. Lots of folks are not being paid a living wage. Of course they choose to stay away and collect unemployment. But again, any business that is paying less than what the VEC is providing is not paying a living wage and frankly, in my opinion, does not deserve to have a workforce.
thank you
and those of you who say don’t use the $600 a week as a deterrent to work for someone and totally blame it on employers, Please! Especially the younger generation. They can travel the countryside and make much more right now than any employer is going to pay them.
Isn’t it really about how much the employer needs to live on and how much they can feasibly pay. There are many scenarios, but $2400 month to many, is not worth working. Now, after September when unemployment benefits are done, let’s see how many employers learned a lesson about valuing employees. Let’s see how many go back to be rehired. It’s a vicious cycle. Everyone must learn from this past years pandemic
This myth is not supported by real study. The memes make for great sound bytes, but not for the facts that wages are flat and employers are not trying to be convincing or competitive. We must stop spreading a myth and look at the facts. Here are some links with studies and facts.
https://www.washingtonpost.com...
https://www.latimes.com/busine...
In the Los Angeles area rents average $2,500/mo. And childcare is $3,000. Who can afford to work for minimum wage? Workers standard of living has been dropping steadily over the last 30 years. Employers need to pay a living wage or they don’t deserve employees.
The unemployment stimulus is not crushing businesses. Businesses not wanting to pay a decent wage are killing themselves. In recent times, all you hear about are companies having record profits quarter after quarter, but only doing so by paying employees next to nothing and offering no benefits. Companies used to value employees, now they just see them as a number that can be replaced. We need to get back to a place where companies actually care about employees. when everyone is taken care of, your bottom line will grow. Also, how can people with children go back to work if schools and daycare are closed? Not everyone has a spare babysitter sitting around. 300.00 a week is not living the glamourous life by any means, I'm sick of the articles claiming it to be so.
We could easily double the clients we serve this summer, but we can't find employees to fill open positions to do the work. The couple that have contacted us either want to be paid cash, off the books, so they can still collect benefits or they want astronomical wages. So I continue to turn down numerous potential clients every day and it is just frustrating.
The data doesn’t support the claim. The article is simply blaming unemployment with no evidence to back it up.
What’s probably closer to the truth is folks found other ways to make it during Covid and have acclimated to that. We exist in relation to our means of production.
I’m on the fence with this one. I know people who are looking for a job, but can’t find one. I think those who have a higher education are having a harder time finding employment. However, many of the jobs available are probably unskilled work.
Please speak to PEOPLE who are unemployed as a result of the pandemic. The vast majority of us are ecstatic when we finally land a GOOD job. National statistics do not support the inaccurate narrative that the Chamber of Commerce is pushing that we don't want to work. The pandemic has brought into glaring focus the urgent need for a livable wage for all. We must stop demonizing the poor and low-income and start looking at billionaires who have increased their wealth by more billions during the pandemic. Start investing in employees by offering a living wage. Even $15.00 an hour is just getting by. Can you imagine living on that? How much would you work for? Finally, Factors like age contribute to successful job search. #FixUI #RaiseTheWage @unemployedact.