Small Businesses Unable To Find Employees
The National Federation of Independent Business (NFIB) reported Tuesday June's Small Business Optimism Index reading equaled 102.5.
The June index result is up 2.9 points from May's reading, but remains below the all time high of 108.8 reached in August 2018. The Optimism index report noted seven of the ten index components improved in June versus May's report.
Despite more than 9.4 million individuals unemployed, firms continue expressing challenges hiring employees, a common theme among those firms that responded to the recent NFIB survey. The below chart shows:
- A record 28% of firms plan to increase jobs while at the same time 46% note they have one or more hard to fill positions. This is occurring at the same time a record 39% of firms report raising compensation and 26% plan to raise compensation in the next three months.
- a near record 26% of firms highlighted that the quality of labor was one of their their single most important business problem while a near record 56% said there were few or no qualified applicants.
With employers facing difficulty finding employees, as noted above they are raising compensation. In an effort to offset some of this higher labor cost, a record 47% of firms indicated they are raising prices.
Much discussion has occurred of late regarding inflation (reported above expectations Tuesday) with some believing current inflation is a transitory issue. We do not disagree with that view; however, with firms broadly raising compensation this can have the result of creating a wage push inflation scenario leading to a higher level of prices running through the economy as consumers have more money to spend. From a positive standpoint productivity is beginning to see some improvement which can lessen a company's need to raise prices if more product is being produced for every hour worked. Hopefully, more on that in a later post. At the end of the day though, companies are having a difficult time finding employees to fill open positions.
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Why is it so hard to find GOOD employees?? The first reason is that for so long the headhunters have been avoiding those folks who were out of work. They would not even be considered.
Of course there is another reason, which can be called "The MTV Syndrome" Those folks are not able to focus their attention long enough to learn a job or even to complete task.That tends to reduce the suitability for most jobs. Years ago an MTV founder explained that they were working to train viewers to never have their attention captured by anything. And they succeeded in doing just that. Ask any public school teacher about the ability to focus attention as being a problem. Be prepared for a lengthly response.
Of course along with that handicap comes an attitude problem as well.
Unfortunately the broad range of pay increases is indeed inflationary, it does nothing good for those unable to adjust their incomes upwardly. It much more reduces the buying ability of all assets, especially all savings. Thus inflation primarily, if not exclusively, benefits the lending business. Perhaps this relationship should be made much more common knowledge and be included in all public educations.
And, more harshly, perhaps, those causing such inflation should be made accountable.
Some of this has to be because so many people are making the same, or even more on unemployment then they were when employed. Don't you think that once unemployment for everyone ends next month, that this trend will reverse? There will be more people will be looking for jobs than open positions.
Agreed. Smart people should start looking for work now while the competition is less and the salaries are increasing. In a month or two the competition will be fierce and companies will likely cut salaries and still fill positions with ease.