Last week, the Labor Department reported that American employers pulled back on their pace of job creation in August, as the U.S. created a three-month low of only 151,000 new positions to fall short of expectations.
Analysts were generally expecting additions to clock in around 180,000 new jobs last month which would have been a decent gain, but still a lot less than the 275,000 new jobs averaged in June and July. Over the past year, the labor market has averaged 204,000 additions per month.
At the same time, a number of recent reports are showing that small business owners are optimistic about growing their business and want to hire new staff. For instance, the 2016 State of Small Business Report, found 71 percent of small businesses anticipating revenue growth this year. With half of them planning to hire. And, similarly, a nationwide survey conducted by insurance company Allstate, in collaboration with USA Today, found 79 percent of small businesses feeling optimistic about the environment in which they operate.
So, with the national jobs numbers showing there’s still a need for job creation and small business owners looking to grow their businesses and staff, why are small businesses having difficulty filling some job openings?
According to the 2016 American Express OPEN Small Business Monitor, small businesses are having difficulty finding the right people to fill their job openings and may be suffering from a Great Recession hangover. The annual survey found that nearly four-in-ten (39 percent, up from 34 percent last year) small business owners plan to hire staff over the next six months, signifying a return to pre-recession hiring intentions. However, for the first time since 2007, finding the right staff has emerged as the number one challenge to growth (19 percent).
“We are seeing a renewed focus on hiring, as businesses manage by the mantra of ‘you are only as good as your people’,” said Susan Sobbott, president, Global Commercial Payments, American Express. “However, it is also apparent many small businesses are encountering difficulties finding the right talent, which is ultimately proving to be a significant challenge to their growth.”
Their search challenges may partly reflect a steadier, in not somewhat healthier economy — more people have jobs, reducing the pool of applicants and the success rate of broad strategies like online job postings. And for some, the challenge is finding staff with very specific skillsets. Changes in the workforce can also make it difficult, especially among younger people who may prefer big cities and have different work goals.
“But owners can also make life difficult for themselves. Some hold to inflexible models developed during the recession — like posting complex jobs for relatively low pay — and many candidates say no because they get better offers. Some employers are still trying to hire one person to do the work of two or three, a tactic that might have worked several years ago but not now,” says Steve Lindner, CEO of The WorkPlace Group, a recruiting firm based in Florham Park, New Jersey. “You’re asking for way too much versus what you’re willing to pay.”
The recovering economy helped many entrepreneurs launch companies, but also has made hiring tougher in some areas. For small business owners, aligning the necessary resources to recruit and retain the most qualified candidates is a major challenge moving forward in the post-recession economy.