New Record: Temp Hiring Surges To 25%, As SMBs Reduce Full-Time Hires, Hedging Bets Against Recession

DATA INSIGHTS | HIRING POLL | Boston, MA: April 7, 2023: Amid federal reports showing signs that the job market is cooling, Alignable's April Small Business Hiring Report reveals that SMB owners are also cutting back on their full-time hiring goals. 

In fact, today's numbers show a drop of six percentage points in hiring full-time workers, down from 35% in February to 29% in March. And the dip was seen among the SMB owners aiming to increase their staffing by 10% to 20%.  Those percentages declined from 28% in February to 22% in March. 

But an even more significant trend has emerged from this latest data -- that small business owners are shifting away from permanent, full-time hiring and employing only temporary, part-time workers and/or contractors, instead. 

Small business owners' rate of hiring only temporary, part-time workers and contractors has skyrocketed to a record high of 25% -- up six percentage points from 19% in February. 

In fact, in at least the past six months, the temporary, part-time hiring rate has never even passed 20% let alone 25%. And March's rate is 19 percentage points higher than it was in December at just 6%, representing quite an uptick.

In survey comments, many respondents said they’re focused on hiring more part-timers and/or contractors, because they want to grow their businesses efficiently. But they’re not sure how long they’ll need them or if they'll be able to afford them in the future, especially if there’s a major economic downturn.

Recessionary & Interest Rate Concerns Drive This Trend

Based on escalating fears of recession, and worries about more interest rate increases and additional bank turmoil, small business owners are hedging their bets by moving forward using more prudent and flexible hiring. 

This survey also found that 60% believe we'll be in a recession in 2023 (up five percentage points from February), and 33% of that group asserts that the recession is already here.

Meanwhile, 74% say ever-rising interest rates are either already hurting their business or will be soon, up five percentage points from 69% in February.

These findings are based on a poll of 3,830 randomly selected small business owners surveyed from 3/2/23 to 3/31/23, as well as data from another 40,000+ small business owners over at least the past six months. 

What About Hiring Freezes, Layoffs & Other Factors?

It's also interesting to note that the rate of hiring freezes reached a record low in March, looking at the past nine months. Only 39% of the small business owners polled are still halting hiring, marking a steady decline each month this year, eight percentage points down from January.

And while that's encouraging, other economic factors are still causing a lot of trouble for small businesses. 

The fact that 39% still can't afford to hire (permanent or temporary workers), and another 7% are still letting staffers go, means that a significant number of small business owners remain in survival mode. Other disturbing findings support this, including that:

• Earnings are down for many businesses: 47% are earning 50% or less of the monthly revenues they generated prior to COVID. 
• And it's even worse for newer businesses. For those starting after COVID, 50% are only making half or less of the monthly revenue they generated a year ago.
  
• Combining both groups, 38% couldn't pay their March rent in full and on time, up six percentage points from 32% in February, marking the biggest surge in rent delinquency in five months. To see more details around Alignable's March Small Business Rent Report, go here. 

As with most polls, there's a lot of economic variation between key sectors. So, as 2023 proceeds, while many businesses continue to struggle, we're seeing some industries bouncing back, especially in terms of their temporary hiring. 

What Are The March Hiring Trends By Industry?

The shift in more temporary, part-time workers and/or contractors being hired cuts across many sectors. But the biggest increases can be seen among these industries:

• Agriculture (45% are hiring part-time workers, up 37% from Feb.)
• Travel (35%, up 23% from Feb.)
• Beauty (18%, up 16% from Feb.)
• Restaurants (33%, up 9% from Feb.), and
• Real Estate (16%, up 9% from Feb.).

Several of these sectors have experienced major struggles with rising interest rates, inflation, gas price spikes, labor costs, droughts, rent increases, and more, so it's not a surprise to see a lift in their temporary hiring efforts as they wait to see what happens next with the economy.

And if you look at their temporary hiring rates earlier this year and later in 2022, you can see that March is a record-breaking month for several of them, including Agriculture, Travel, Beauty, Construction, and Real Estate.

Meanwhile, some sectors swayed the other way, hiring fewer temporary workers:

• Manufacturing (9%, down 14% from Feb.)
• Gyms (25%, down 7% from Feb.), and
• Finance (15%, down 8% from Feb.).

So, How Does This Compare To Overall Hiring Trends?

There are some similarities, as you can see looking at the chart below. As you can see, hiring in Agriculture has gone up, but only 11% of that figure is in full-time hiring (while 45% is assigned to part-time employment). 

Travel gives us a similar picture, as 35% of the hiring is in the part-time/temporary category, while just 30% covers full-time, permanent employment.

Regarding restaurants, 28% of the hires are full-time, while 33% are part-time, temporary workers, which makes a lot of sense for that industry. It's just nice to see restaurant hiring overall has reached a new, six-month high. That could be a very welcome sign for that industry, which has struggled to find enough staffers for over a year. 

And while overall hiring is down by 15 percentage points for manufacturers, 52% of the hiring in that category is full-time, permanent. It's similar for the finance category: 29% are hiring permanent staffers, while only 15% are opting for contractors or other part-timers. But overall hiring in finance is down in March, by 13 percentage points. 

That figure alone shows that those in finance appear to be trimming their overall spending on staffing given current economic uncertainty. 

Just as these charts show some pretty big swings in both overall hiring and temporary employment figures, when you look at the states, you also see some with SMBs that appear to be thriving based on their employment figures, as well small business owners just trying to stay afloat. 

What's Happening Across Key States?

Let's start with the temporary, part-time hiring trends. As the following chart indicates, Michigan, Ohio, New York, Massachusetts, and New Jersey are leading the "temp trend."

In Michigan, 31% of SMBs are hiring temporary workers, up 12 percentage points from February, and up 15 percentage points since January. 

Ohio isn't far behind with 30% of its SMBs tapping this part-time trend, up 13 percentage points from February. 

New York, Massachusetts, and New Jersey are all above the average (which is already high, compared to past months), but Massachusetts (at 26%) had the biggest surge -- temporary employment is 22 percentage points higher than it was in February.  Also at a hiring rate of 26%, New Jersey is up seven percentage points.

While Illinois is holding steady with 21% of its SMB owners hiring temporary workers to try to stay ahead of recessionary fears, North Carolina and Colorado have dropped significantly from February. That's when those two states actually led the pack in terms of temporary, part-time hiring. 

California, Texas and Florida are on the lower end of this scale and could likely benefit from seeing what peers in the Midwest and the Northeast are doing to beef up their reserves of temporary, part-timers and/or contractors.

Overall Hiring: IL, CA, CO, TX, FL, & NJ Slip Backwards

In February, Illinois-based small businesses topped this chart, with 68% hiring again, but now this state has fallen to the bottom of this ranking, slipping 28 percentage points all the way to just 40%. This is the most significant drop among the larger states in this poll. 

While it remains positive that 21% continue to hire temporary, part-time workers, this means only 19% of Illinois' small business owners who took this poll are hiring permanent, full-time staffers -- a full 10 percentage points below the national average. 

This is cause for concern and reflects a general lack of confidence in the economy looking forward. We'll be watching this state carefully next month to see if this was just a temporary setback or if it indicates an even more serious situation.

Other major states are below the national average for overall hiring and dipped in their standing from last month, too. 

These include:

• CA (40%, down from 43% in Feb.)
• TX (41%, down from 52% in Feb.)
• CO (47%, down from 59% in Feb.) and
• FL (48%, down from 50% in Feb.).

New Jersey also saw a drop of five percentage points from 59% to 54%, but at least small businesses in that state matched the national average. 

Of course, that also means the majority of NJ's SMBs are, indeed, hiring, vs. states like IL, CA, TX, CO and FL, where the majority of SMBs are NOT hiring (either full-time, permanent, or part-time, temporary workers). 

In contrast, those topping the list in March are:

• MI (69% of SMBs are hiring, up 21 percentage points from 48% in Feb.)
• PA (63%, up 26 percentage points from 37% in Feb.) and 
• OH (61%, up 18 percentage points from 43% in Feb.).

Those are some major gains. Let's hope those businesses can continue to drive the momentum necessary to keep those hiring rates up, generating more income to cover those extra expenses.

Want More Data? 

To see more specific findings from Alignable's April Small Business Hiring Report covering other industries, states, or demographic groups, please contact me at chuck@alignable.com. There's certainly a lot more to share.

To review past poll results, go here or to the Alignable Research Center.

About The Alignable Research Center

Alignable is the largest online referral network for small businesses with 8 million+ members across North America.

We established our research center in early March 2020, to track and report the impact of the Coronavirus on small businesses, and to monitor recovery efforts, informing the media, policymakers, and our members.