Strong Job Growth Cannot Hide The Dire Situation Small Businesses Are In – By Panos Mourdoukoutas Ph.D. (International Business Times) / July 9, 2022
A streak of solid job growth reports, including one last week, cannot hide the perfect storm small businesses are in, fueled by supply chain bottlenecks, labor shortages, government regulations, and inflation.
Strong job growth is usually a good thing for every economy. It’s a sign that businesses are growing, jobs are plentiful, people bring a paycheck home, and they have money to spend on things they need, leading to more business growth and employment. That’s what economists call the virtuous cycle of growth.
But job growth this time is also associated with low labor force participation and tight labor markets. As a result, they create labor shortages making it hard for businesses to find and retain qualified personnel to run their basic operations. That’s especially the case for small businesses which operate in competitive markets. For instance, diners must cut the hours they stay open as they have difficulty finding people to keep the old operation schedules.
“While some businesses are reaping the regard of a return to normalcy, it’s clear others are still struggling to find their footing,” said Andrew Duffy, CEO, and Co-founder of SparkPlug, in an email to International Business Times. “The competitive labor market, while indicative of businesses hiring, fails to include data on workforce retention. A competitive labor market wherein there is more demand than there is supply leads itself to a costly cycle of constant churn, as workers feel less loyalty to their employer and feel more liberated by the abundance of opportunities and roles in the marketplace.”
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