Hiring Crisis: Small Business Owners Speak Out on the Labor Shortage

Date: November 04, 2021

Owners continue to be challenged by a shortage of qualified applicants while trying to recover from the pandemic

One of the most biggest challenges for small businesses in 2021 has been the unprecedented labor shortage. At the end of 2020, 32 percent of small businesses reported that they had open positions they could not fill. That number has steadily risen throughout this year and NFIB’s September Small Business Economic Trends report found that a record-high 51% of owners had unfilled positions. 

This crisis has created staffing problems and hindered economic recovery for small businesses across the nation. As part of NFIB’s In Their Own Words campaign, where small business owners from around the country describe their circumstances and concerns, owners from different industries explain how a shortage of qualified job applicants has affected their businesses. 

Melissa Cline, owner of Konvulse LLC, a small performance custom auto and repair shop in Las Vegas, has seen her business suffer from the labor shortage. “Some of the challenges we have faced in the last six months in particular has been to acquire skilled workers,” Melissa said. “It’s been very difficult to get a new mechanic, get a new qualified technician, there were four months consecutively… with zero qualified applicants to hire, which really hindered our business’ ability to service the customers who want to get their cars repaired or to get performance-enhancing products on their vehicles.” 

Lisa notes that since her company already offered excellent benefits compared to its competitors, they wouldn’t be able to attract new employees without increasing guaranteed wages. But as the labor shortage continues to worsen, she’s concerned that it may lead to a fundamental change in the way outward-facing businesses like hers engage with their customers.  

“Many are looking to replace people with technology which will ultimately impact customer service,” Lisa said. “If I order from a kiosk, who do I consult if my order is incorrect? If this trend [of people leaving the labor force] is ultimately reversed, will technology ever be replaced with people again? I’m sure innovation will improve performance, but I think it will change customer service forever.” 

Kimberly Thompson, of Kimberly Thompson Insurance Agency in Bloomington, Indiana, mentioned that many owners she knows are considering selling or shuttering their businesses. “I also work with a lot of small business owners and I’m hearing that they’re having trouble finding qualified employees to hire and getting people back to work,” she said.  

“Many of these small business owners are so concerned with the proposed tax increases [that Congress is considering] that they’re considering getting out of the business all-together… for most small businesses, their money is essentially in one pot so if the employer has to pay more for increased taxes or to comply with mandates, the money would come from either laying people off or reducing benefits to cover the additional costs.” 

Lisa Fullerton is an NFIB member and founder of A Novel Idea, LLC. She worked alongside her husband, sister, and children to bring Auntie Anne’s pretzels and Cinnabon cinnamon rolls to San Antonio, Texas. During the pandemic, Lisa retained as many of her employees as she could by cutting their hours.  

“We noticed those employers who actually thrived during COVID, such as grocery stores, home improvement stores, and restaurants with drive throughs were desperately in search of employees to address their increase in demand,” Lisa said. “They began to raise wages that ultimately attracted employees from those of us who didn’t have the revenue to sustain wages – much less increase pay. It took several months to realize that wages were going to have to increase if we were going to attract and retain talent.”  

Ultimately, the rapid changes to the industry convinced Lisa to sell A Novel Idea. “In August of 2021 we sold our mall stores and have a management company running our airport location,” she said. “The staffing and supply chain issues were eroding my ability to think strategically, so I chose to hire someone whose expertise is in the operational arena. This is my way of responding to the reality of the situation, while positioning the business I’ve put my blood, sweat and tears into – to ensure future prosperity. “ 

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