The Impending Small Business Labor Shortage

Labor shortages, for a variety of reasons, are greatly affecting small and large businesses alike, and there doesn’t seem to be any relief in sight. Small businesses, especially in the blue-collar and service industries, will need to understand the challenge as the economy expands back to pre-COVID levels, and put in place strategies to combat the trends and keep production on track.

One cause
for the immediate labor shortage is primarily due to the COVID pandemic and
related shutdowns and economic relief efforts. While the relief efforts saved
many businesses and individuals, it has now made available “free” money to
people that would otherwise be available to work. Who wants to take a pay cut
to go to work? Unemployment benefits are currently the equivalent of a
full-time job at $17-18.75 per hour.

Jobless
claims are rising, and many are not even looking for work. Our California
government is certainly not helping…the EDD is sending letters to individuals notifying
them that their unemployment has been extended and they can reopen their claim.

Add to the current ease of accessing unemployment insurance, the labor market was already tightening in 2019 for various reasons. The unemployment rate was down to 3.5% and the economy was on fire. These factors are also playing a role:

• The “baby-boomers” retirement wave has shrunk the workforce
• College-bound youth and college graduates are increasing
• The numbers of disabled adults have increased
• More and more young adults are living at home with no pressure to earn a living

These trends
are drastically affecting hiring and employee retention. Big businesses are
aware of these challenges, and many have increased entry-level pay rates to
attract more workers.

Small business can’t always compete with higher wages, so here are some creative ways you CAN compete:

Retain
Your Best

Retaining
your core employees will be most critical because your core staff may get you through times where you
simply don’t have enough people. Using strategies such as higher wages,
performance bonus plans and employee benefits will help keep your employees
working when competing positions come available.

Another strategy is to make your workplace a great place to work. Creating a great culture with flexible hours if able, creative benefits, bonus plans, employee engagement, are all things employees want, and what they need to support their families.

Hire
Smart

Finding good employees will be a challenge for the foreseeable future and it will involve a creative and timely approach to hiring. You will need to find new ways to source potential candidates and screen them. Yes, experience and skills will be important, but so will culture fit. (Read “Hire Like the Pros”)

Hire
Quick

Good
employees tend to disappear quickly (“Ghosting”). Find the right people for the
job, hire and onboard them quickly, and make whatever adjustments you need to
ensure they meet your position requirements.

Screen
Candidates

Keep in mind, there will be a large number of candidates who have not been working, or have been working sporadically for 6 months to a year. Find out why. Be cautious about who you hire as you may end up with employees that will jump ship for any opportunities they perceive to be “better” in some way.

Infinium
HR Resources

Infinium HR and Infinium Staffing offer several resources to help you hire. We offer an Applicant Hiring and Tracking system, Hire on the Go, which allows you to post jobs in multiple venues, screen and respond to candidates, and it integrates fully with our onboarding and payroll system.

Our staffing division can help you find candidates for short or long-term projects, or help you hire for permanent positions. We have the resources and experience to help you find the best people for your business.

Contact our HR and Hiring experts anytime or request a consultation.