About 45% of small business owners in the United States are freezing the hiring of new workers due to high labor costs and soaring inflation, according to the Alignable July Hiring Report.
A competing survey yielded similar results, interviewing 4,739 small business owners, conducted from late June to mid-July.
This despite the fact that 51% of small employers are still trying to find workers to fill important positions, but the changing labor situation this summer has made things more difficult.
The report, released on July 21, follows the latest data from the US Bureau of Labor Statistics showing that consumer prices rose 9.1% in the past year, the highest in more than 40 years. . Meanwhile, the BLS producer price index rose near the highest on record at 11.3% in the previous 12 months.
“This represents a significant hiring shift and is largely a reaction to rising labor costs, soaring inflation, fears of a recession and rising interest rates. of interest,” Alignable said.
The survey found that 4% of small businesses planned to lay off staff and that “some employers noted that they had learned to live without the extra staff, by making other changes and/or working more themselves. of hours”.
This includes 5% of businesses in real estate and the automotive industry and 3% in retail.
Too expensive to rent
Hiring freezes vary from industry to industry and state to state, 66% of gym owners, 63% of real estate companies, 38% of restaurants, 58% of transportation companies , with 55% of automakers and 55% of retailers reporting a shutdown.
Some states have more hiring issues than others, while other small businesses are more selective in trying to hire the right people for positions, but the majority of business owners think it’s too much. expensive to hire right now.
“The top 5 states most affected by the hiring slowdown are NJ (64%), FL (63%), TX (52%), VA (52%) and CA (49%),” reported Alignable. , noting that, “3% to 14% of all small business owners in these states say they will also be forced to lay off staff.”
Five other states on the list aren’t far behind, with 48% of Pennsylvanians, 47% of Ohio, 41% of New Yorkers, 39% of Massachusetts, and 33% of Colorado SMEs having freezes in place. hiring.
Only 26% of all small businesses reported a full recovery to pre-pandemic revenue levels, while 60% said their labor costs had increased.
About 18% of these employers admitted that wages are now 25% higher than they were before 2020.
Manage without additional staff
Finally, some employers indicated that they had learned to live without additional staff, by making other changes themselves and/or by working longer hours.
The website admitted that other poll takers are beginning to factor in the potential negative effects of a looming recession.
The other survey found that at least 48% of small business owners think we’re already in a recession, and 32% predict one later this year.
The Alignable survey of 5,350 small business employers was conducted from May 10 to July 19.