We’re at a watershed moment.
Friday’s huge jobs report shows that the U.S. economy has recouped all the losses tied to the pandemic.
But there’s a tough balancing act confronting the “Main Street” small and midsized businesses (SMBs) that are the locomotives pulling the U.S. economy, swelling the employment ranks — and by extension, powering consumer spending.
These smaller enterprises must hire to keep pace with real and anticipated growth. To stay competitive, they have to pay competitive wages.
And margin pressure is coming from inflation — the tailing that is driving wages up, along with the cost of the raw materials, rent, freighting costs, inventory, and well, you name it. One way to combat that pressure beyond simply raising prices is to invest in automation.
The Friday jobs report marks a continuation of a long-standing trend, one that is borne out by PYMNTS’ research.
Earlier this year, PYMNTS’ research found that “the pandemic recovery is real and making its way quantifiably across America’s cities and regions. The report, “Main Street Index: How America’s Small To Mid-Sized Businesses Are Rebuilding For A Post-Pandemic Economy,” showed how growth had already returned to pre-pandemic levels. Two-thirds of SMBs surveyed said they’d anticipated sales growth ahead. Inflation remains a wild card of course.
By any stretch of the imagination, a gain of 528,000 jobs in July, as reported by the Bureau of Labor Statistics on Friday (Aug. 5) is an impressive number. The surge, which was widespread across sectors, hints at optimism across the board. After all, firms don’t staff up unless they anticipate that the demand will be there in the future for goods and services, which necessitates having more hands on deck.
At the beginning of the year, we found that employee-related costs, such as wages, are a concern for about 29% of companies that glean a majority of sales online and are a concern for almost a third of firms that have split their sales between online/offline channels.
The urgency was there to bring automation to the back office, to the stockroom, and to the consumer-facing interactions. With technology in hand, these SMBs can pivot to maximize top-line growth and do more with less, so to speak. It’s no secret smaller firms pivoted during the pandemic, and are still pivoting, to update and upgrade their operations
By way of example, separate PYMNTS research has found that 76% of SMBs boosted their digital payments capabilities. And there is significant room for improvement: Earlier this year, about a third of firms that sell their offerings mostly online said they’d be investing in automation of manual tasks; 12% of brick-and-mortar only companies saying the same.
Keeping Pace with Growth
The headline numbers and data points put forth by the BLS are positive ones: The unemployment rate now stands at 3.5%. And per the BLS, “both total nonfarm employment and the unemployment rate have returned to their February 2020 pre-pandemic levels.” Leisure and hospitality firms added 96,000 jobs and professional and business services were up 89,000 positions. Retail firms boosted their ranks by 22,000 jobs. Those are among the key sectors populated by Main Street firms.
Beyond that push, upgrading other aspects of day-to-day operations means that transparency and visibility are key benefits, enabling cash to come in faster and for managers to tweak business models as demand changes — and where a significant percentage of SMBs have said they’d look to do everything from adding digital wallets to offering curbside pickup in a bid to become truly omnichannel. Most recently, the “SMB Guide to Navigating Black Swan Events: Managing Risk by Accelerating Innovation” points to the fact that technology can help companies stay “elastic” — no matter what challenges lie ahead.
Read Also: SMB Guide to Navigating Black Swan Events: Managing Risk By Accelerating Innovation
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