Labor Demand: Layoffs were Common During the Pandemic, So Why are Small Businesses Struggling with Labor Supply Now?
Labor demand increased by 13% according to recent statistics and supply increased by 132 percent from 2019 to 2020. Furloughs and layoffs were abundant just over two years ago when the pandemic hit, and the statistics don’t lie. The Bureau of Labor Services found that between 2019 and 2020, labor demand decreased by 13 percent, while supply increased by 132 percent. Today, that is a different story— “hiring” signs are posted at many businesses and staff shortages seem to be the norm. The labor force supply has not yet bounced back to the pre-pandemic percentage, and there are still 5 million openings in small business positions, says CFO.
While the economy as a whole is struggling to meet labor demand, why are small businesses in particular experiencing issues? Well, for one, 41 percent of small businesses were unable to pay their complete rent in November of 2022. Another possible reason is because they may lack the resources to offer competitive benefits compared to larger companies. A combination of ingredients like these creates a recipe for labor shortages.
What can these small businesses do to build back up and attract more people to their labor force? Mike Pierce, Vice President of Lockton Companies, provides some key ideas for small business owners attempting to rebuild their workforce.
“Seeing millions of jobs being open at small and medium-sized businesses really isn’t that surprising. If you look at the macro trends, the reality is we are gonna have a lot more jobs than we are employees for quite some time, if not for decades to come. Anybody who’s in the business community right now has to figure out how we get really, good at talent acquisition.
That means being able to go out there and recruit and retain the talent that we need. Now, small and mid-size businesses, there’s no question. Sometimes there can be a disadvantage. when it comes to employee benefits, I can tell you a few things that small and mid-size employers can do to go out there and actually try to compete for talent with some of the bigger companies out there.
The first thing is, that a lot of the benefits that bigger companies offer aren’t necessarily completely turned off to small, mid-size employers. A lot of small and mid-size employers can go out and access those benefits. Things like healthcare. Disability insurance, parental leave policies, pet insurance, 401k programs, all of that is accessible regardless of the size of your organization.
The reality is you just have to work with a good advisor that can help you shine a flashlight and find a lot of those benefits. Know where to go and look for ’em. The second thing that I see a lot of small, and mid-size businesses not do too well on when it comes to employee benefits, and candidly even sometimes the Fortune five hundred don’t do too well on, is effectively communicating those benefits to both perspectives and employees that are already working for the organization.
You’d be amazed at how far it can go when you just sit down and tell the employee what they have access to and show them how to access those benefits. I can ensure you having an employee deeply engaged in your employee benefits program will typically create a lot more stickiness with that organization. Make it a little bit easier to retain those employees.
So there are things that small and mid-size employers can do to really still navigate this market, but the reality is it might be a little tougher, but still don’t give up hope. A lot of these benefits that big Fortune 500 organizations are offering are still very accessible to small and mid-size businesses.”
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