One-fourth of small businesses say labor quality their biggest problem

By KEVIN BESSLER, The Center Square

As small businesses begin to reopen after COVID-19 shutdowns, many are reporting a shortage of qualified workers.

The National Federation of Independent Business Uncertainty Index saw an uptick in March, driven by a labor shortage. Owners say they are uncertain whether it is a good time to expand their business and make capital expenditures in the coming months.

NFIB Illinois Director Mark Grant said members report having difficulty finding candidates to take the positions that are available, and it is making it difficult for them to recover from the COVID-19 downturn. He believes two factors are behind the shortage.

“If they haven’t gotten the vaccination, they might still be concerned about getting COVID, and the other of course is that they are getting enhanced unemployment benefits that are going to last for several months,” said Grant.

President Joe Biden’s $1.9 trillion COVID-19 relief package will extend enhanced unemployment benefits until Sept. 6 with $300 more per week on top of what Illinois pays. In a span of 25 weeks, that is $7,500 extra in federal unemployment insurance for a person in addition to the state’s check amount.

Some small business owners have been forced to offer more compensation to attract workers. Twenty-eight percent reported raising compensation, and 17 percent plan to do so in the next 3 months.

Grant said smaller companies will be at a disadvantage in finding workers.

“You’ve got big employers who can afford to pay more, so they are going to be snatching up employees probably faster than the small guys can,” said Grant. “When you are small you can’t always pay as much as much as the big folks can.”

Other findings in the NFIB index included 7 percent of business owners cited labor costs as their top business problem, and 24% said that labor quality was their top business problem.

“Our members are ready to “go and grow” and by that I mean employ more people and they are paying more right now so when people see that, I think they are going to be more willing to jump back into the workplace,” said Grant.

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