Inflation Hobbles SMBs’ Ability to Find, Hire Workers

Small business owners are reportedly struggling with hiring, with head counts down at smaller companies, The Wall Street Journal reported Monday (June 20).

This comes even as larger firms are still seeing good amounts of employment, according to ADP payroll data cited by the Journal.

The owners of smaller companies have said inflation is compounding their issues, including the difficult job market. That has made it harder to keep up with the wages and benefits large employers can offer.

Because of that, smaller businesses are experiencing stunted growth and are unable to make advancements. The report noted that 63% of small business owners have said hiring challenges have kept them from operating at full capacity, citing a study of over 825 small businesses from business coaching and peer advisory firm Vistage Worldwide.

The report noted how small businesses have been spending more to attract and retain workers, with 76% of owners saying they’d upped wages to respond to the challenges in the market.

That comes as small business confidence has been falling, falling in June and hitting lows last seen in July 2020, according to Vistage’s data. Nine percent of the owners surveyed said they think the economy will improve in the U.S. in the next year.

However, despite the worries, 52% also think the headcounts will be up over the next year.

The report noted that larger companies have also been more cautious about hiring as of late. That could make more opportunities in the long run, although it has still left the smaller companies playing catch up for now.

PYMNTS, quoting Treasury Secretary Janet Yellen, said there’s a likelihood that things will remain fraught economically this year.

Read more: Yellen Expects Inflation Through 2022, Economic Slowdown

“We’ve had high inflation so far this year, and that locks in higher inflation for the rest of the year,” she said Sunday on ABC’s “This Week.”

May saw inflation sitting at 8.6%, a 40-year high, which Yellen said was spurred by numerous things, including the energy supply impacted by the Russia-Ukraine war and disruptions from COVID lockdowns in China.