Hiring Employees for Your Small Business in a Labor Shortage
As the economy continues to rebound from the pandemic, businesses are starting to reopen and hire employees. According to the Bureau of Labor Statistics, the unemployment rate in the United States was 3.6% in May 2022, down by 2.2 percentage points from May 2021. While this decline is good news, it also means that businesses are competing for a smaller pool of workers.
The pandemic has exacerbated an already existing labor shortage in the country. Finding employees for a small business is increasingly challenging. As per the Labor Department, there are 5.5 million more job openings available than there are workers to fill them. The most common reasons cited for not being able to fill these positions were a lack of qualified applicants and the reluctance of people to re-enter the workforce post-pandemic.
In this article, we’ll discuss some of the challenges businesses face and provide labor shortage solutions for finding employees for your small business.
Why Is There a Labor Shortage?
There are a number of reasons behind the current labor shortage in the United States.
Firstly, the baby boomer generation is retiring. According to Pew Research Center, every day 10,000 baby boomers reach retirement age. This mass exodus from the workforce is leaving many businesses without experienced and qualified employees to fill these empty positions.
Secondly, the pandemic has resulted in many people leaving the workforce altogether. According to the Bureau of Labor Statistics, the labor force participation rate is at 62.2% as of May 2021, down from 63.4% in February 2020. While some of these people may return to the workforce as the pandemic subsides, others may have chosen to permanently leave for various reasons such as childcare or health concerns.
Thirdly, there is a skills gap in the United States. In a survey of 1,100 businesses by Goldman Sachs, 95% admitted that they are struggling to hire workers with the necessary skills for open positions. This is because the jobs available today require more specialized skills than in the past. As technology advances, businesses are looking for employees with specific skill sets such as coding or data analysis. However, there is a lack of qualified workers with these skills and other highly sought out skills.
Lastly, the current economic conditions are making it difficult for businesses to find and retain employees. With the economy improving, people have more job options and can be more selective about where they work. In addition, many people are still working remotely, which gives them the flexibility to work from anywhere in the country. This makes it difficult for businesses to compete for talent, especially if they are located in areas with a high cost of living.
Labor Shortage Solutions for Small Business Owners
If you’re having trouble finding employees for your small business, you may wonder what solutions are available to you in a labor shortage.
Offer Incentives
One solution is to offer incentives to attract and retain employees. This could include offering higher wages, flexible hours, or remote working options. In addition, you could offer perks such as free food or child care services. By offering these types of incentives, you’ll be able to make your business more attractive to potential employees.
Focus on Passive Candidates
Another solution is to focus on hiring people who are already employed. While this may seem counterintuitive, it can actually be very effective. Many people who are already employed are happy with their current job but are open to new opportunities if they are presented with a better offer. Passive candidates are open to work but aren’t actively seeking. You can come to them with your interest and see if the interest is mutual.
Prioritize the Well-Being of Current Employees
By making your current employees a priority, you’ll be able to reduce turnover and keep your best talent. This is important because it will save you costs on hiring and will keep your business staffed to run smoothly. Make sure current employees are happy with the work environment, and if not, make an effort to fix any problems. Your current employees are valuable resources and should not be overlooked when thinking about the labor shortage.
Look Outside Your Industry
Another solution is to look outside of your industry for employees. This could include hiring people who have recently been laid off from other industries or recent graduates who are looking for their first job. While these employees may not have experience in your industry, they will likely be excited about the opportunity to learn and grow in their careers. A tip is to look for talent that is coachable, regardless of their background. Raw talent with a teachable personality is a recipe for success for any employer.
Use Technology To Your Advantage
Finally, you can use technology to your advantage when hiring employees. There are a number of online tools available that can help you reach a wider audience of potential employees. In addition, you can use social media to post job openings and attract candidates. By investing in these tools, you’ll be able to connect with a larger pool of talented workers.
Ensure That Your Business Is Well-Equipped To Hire Employees
When hiring employees in a labor shortage, it’s important to make sure that your business has the financial capacity to do so. This includes having the budget to offer competitive wages and benefits. In addition, you’ll need to have the infrastructure in place to support remote working if you plan on offering that as an option. By investing in your business, you’ll be able to attract and retain the best talent.
Hiring employees can be a challenge in a labor shortage. However, by using these solutions, you’ll be able to find the people you need to grow your business.
Looking to ramp up operations soon? Ensure that your small business is prepared for the challenges, starting with getting the funds you need to grow and thrive. LendThrive offers fixed-rate business loans of up to $150,000 to help small business owners take advantage of opportunities and manage cash flow. At a time of labor shortage, having the right financing in place will give you the flexibility to make the decisions you need to grow your business.
