Small Businesses Continue to be Challenged by Labor Shortages and Supply Chain Disruption

Date: September 27, 2021

Fifty percent are significantly impacted by supply chain disruptions and another 27% by significant staffing shortages.

In a survey of small business owners published last week by the NFIB Research Center, two major headwinds facing small businesses as they fight to recover from the pandemic and business restrictions, remain staffing shortages and supply chain disruptions.

“Supply chain disruptions and staffing shortages have become substantial issues for small businesses across the country,” said Holly Wade, Executive Director of NFIB’s Research Center. “Small employers are making business operation and hiring adjustments in order to compensate for both issues.” 

The survey was conducted in early September amid spiking COVID cases. At this point, some major federal relief programs such as the PPP loan have closed, while other recovery assistance programs are still available. 

Key findings from the survey include:

  • Half of all owners reported that supply chain disruptions have significantly impacted their business, and more than half (55%) of those affected report that the supply chain disruptions are worsening.
  • The vast majority (86%) of owners anticipate supply chain disruptions will continue well into 2022. 
  • Forty-five percent of owners are experiencing a moderate-to-severe staffing shortage. Of these owners, over half (52%) are experiencing a moderate-to-significant sales loss as a result of unfilled positions. 
  • The staffing shortage is worsening: 49% of owners reported that they received fewer job applications now than they did a month ago, compared to 15% who received more than they did a month ago. 
  • To counter the staffing shortage, most (77%) of small employers reported that they increased wages. Smaller numbers offered better benefits such as paid time off (17%), hiring bonuses (16%), referral bonuses (18%), or enhanced health insurance benefits (21%). 
  • Almost all (88%) of owners are working longer hours to compensate for the labor shortage, with 64% offering overtime and 41% expanding hours offered to part-timers. 
  • A third (33%) of small businesses report that their sales numbers are 75% or less of that before the pandemic. Forty-one percent have returned or nearly returned to normal sales numbers, and a quarter (26%) are exceeding pre-COVID sales. 
  • About a fifth of all owners (21%) report that economic conditions have returned to normal in their area. Most owners expect that conditions will not improve until 2022 or beyond. 
  • Of the 76% of owners who received PPP loans in 2020, almost all (94%) have applied for loan forgiveness and 41% applied for a second-draw PPP loan in 2021. 
  • Meanwhile, only 8% of owners claimed the Employee Retention Tax Credit (ERTC) on wages in 2021 and 20% applied for Economic Injury Disaster Loans (EIDL). 
  • Nine percent of small business owners say that the recent spike in COVID-19 cases had a large impact on their business, with another 36% saying that it had a moderate impact. 

This publication marks NFIB’s 19th Small Business COVID-19 survey assessing the health crisis’s impact on small business operations, economic conditions, and utilization of the targeted small business loan programs. Read the complete 19th edition survey results here.

The full series of NFIB COVID-19 surveys began in early March 2020 and can be found here.

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