PROVIDENCE – Small businesses are finding their usual hiring efforts aren’t producing the same results, according to a new survey by the Federal Reserve Banks.
The Small Business Credit Survey, a collaboration among the 12 Federal Reserve Banks, found that hiring attempts had not changed drastically between 2018 (the last time there was a tight labor market) and 2021. Indeed, about three-quarters of employer firms had tried to hire workers in 2021, compared with 71% in 2018.
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But filling those open positions has become much harder, with more than 4 in 10 survey takers saying hiring was “very difficult” compared to 27% who faced similar challenges in 2018, according to the survey.
Problems hiring pervaded businesses of all revenue sizes but varied based on industry. Leisure and hospitality businesses struggled the most, as well as finance and insurance companies, while professional services and real estate reported the least difficult hiring.
A lack of applicants topped the list of reasons for hiring woes, named by 78% of businesses. More than half also cited lack of skills or experience as a problem, followed by competition from other employers (40%) and retention problems (31%).
Still, companies are trying to find workarounds, with nearly 6 in 10 raising wages, and almost as many (55%) shifting more work on to existing workers. Higher-revenue firms were more likely to increase pay, while those reporting less than $100,000 in annual revenue opted to reduce operations.
The survey reflects responses from 8,000 small businesses, defined as those with 1-499 employees, collected during the fall of 2021.
Nancy Lavin is a PBN staff writer. You may reach her at Lavin@PBN.com.
