Unemployment and Small Business Hiring
Since the start of the Great Recession and on through the ensuing (yet inconsistent) recovery, one of the yardsticks that has been used to gauge the nation’s economic health has been the unemployment rate.
Since peaking at 10 percent in October of 2009, the national unemployment rate has steadily declined to the current level of 8.3 percent, with 227,000 new jobs added to the U.S. economy in February.While the decline is encouraging, unemployment remains stubbornly high, especially in comparison to where it stood at this point in previous recoveries. From the beginning of the expansion (in July 2009), job creation plans have lagged all other recovery periods, including the ‘jobless recovery’ in 2001, reports the National Federation of Independent Business (NFIB).
Small Biz Is Hesitant to Hire
One of the main obstacles to getting the unemployment rate back down to more normal levels, say economists, is the ongoing hesitance of small businesses to step up their hiring. In a recent survey it conducted, the NFIB found that its members added an average of just 0.11 workers in February, which was virtually a break-even. This followed another break-even month in January when NFIB members added no new workers on average.
While 12 percent of NFIB members said they have added an average of 3.4 workers over the past few months, this is offset by 14 percent who say they have cut an average of 2.4 jobs during this time. The remaining 74 percent said they have made no changes in employment over the past few months.
NFIB Chief Economist William C. Dunkelberg points out that while small firms have eased firings (initial claims for unemployment were 362,000 for the week ending March 3), they haven’t resumed strong hiring. “The net percent of owners planning to create new jobs unexpectedly fell 9 points to -4 percent (seasonally adjusted), the fourth monthly decline. This is ominous news for the months to come, meaning we can expect few new jobs from Main Street.
But Where Are the Qualified Workers?
Given the high national unemployment rate, it would be easy to assume that small businesses that do want to hire would have no trouble filling positions. But that’s not necessarily the case, notes Dunkelberg.
“The ability to find qualified applicants for available jobs continues to be a problem for many small business owners,” he says. “Forty-four percent of owners either hired or tried to hire in the last three months, but 33 percent of them reported few or no qualified applicants for the position.”
So here’s the scenario: Unemployment remains historically high, which should represent a tremendous opportunity for small businesses that are growing to choose from a large pool of qualified candidates. Instead, many of these businesses are struggling to fill positions of need, especially those that require unique skills, experience and/or training.
If you’re actively seeking to grow your business by hiring more employees, this scenario paints a mixed picture. On the positive side, higher unemployment means that more people are actively looking for jobs. However, if you need to fill positions that require a high degree of specialized training or technical expertise, it might be harder than you’d expect to find qualified individuals.
Manufacturing firms are having an especially hard time finding workers with the math and computer skills needed to operate today’s more sophisticated and high-tech machinery, notes Dunkelberg. For example, only 10 percent of businesses in the relatively unskilled service sector said they’re having a hard time filling jobs, but nearly twice this many (18 percent) manufacturing firms said they are.
“Today’s workforce simply isn’t keeping up with the dramatic shifts taking place in terms of the job skills needed in most industries,” Dunkelberg concludes.