Almost two years later, owners Frances Reed and Jessica VonDyke were forced to close the shop.
“We couldn’t hire anyone,” Reed said. “We have never had a problem with demand for our services. It was 100% a matter of supply for us.”
Previous When the pandemic hit, Freed Bodyworks had 20 practitioners booking up to 550 clients a month. That he restarted with a minimal crew of eight, too few to bring in enough income to sustain the business, Reid said.
Two of the former employees went on to graduate school, three moved to cheaper areas, and several had to take care of their families. Additionally, the closure of in-person instruction at massage schools has dried up what was once a promising pipeline of emerging talent.
“We were able to hire three full-time employees during the entire period from reopening to closing,” he said.
Reed is not alone. Today, small business owners across the United States are facing severe labor shortages that experts warn have reached crisis levels.
NFIB Chief Economist Bill Dunkelberg said:
The current labor market presents challenges for employers of all sizes, but small businesses lack access to the cash flow, credit and economies of scale enjoyed by larger companies Ammo is running out in the fight to get. This makes it difficult to offer things like competitive wages and bonuses for his sign-on.
“It’s probably true that big box stores are paying more,” said Harry Holzer, a public policy professor at Georgetown University.
This puts independent businesses at a serious disadvantage. “If they operate on tight margins, they may not be able to afford to raise wages to attract more workers,” Holzer said.
Inflation is a ‘double hit’ for small businesses
Susan Sarich founded SusieCakes in 2006 and has grown it into 26 bakery chains. Most of them are in California. But her headcount has plummeted from nearly 500 before the pandemic to just over 200 now, and rebuilding that number is becoming increasingly difficult.
“We increased hourly wages by nearly 20%. [but] The cost of living is exorbitant,’ she said.
To combat this, her bakery is closed two days a week with reduced hours. She has cut back on her product offerings, including dropping customer favorites such as Iced Her Sugar Her Cookies based on her beloved family recipes.
“There was demand, but we were short on manpower, so we had to move to a reduced workforce model pretty quickly. For us, that meant fewer days, fewer hours and fewer products.” she added. She’s still down about 15% from pre-pandemic earnings.
Eric Groves, CEO of Alignable, an online platform for small businesses, said owners are in a tough spot as inflation rises, costs rise and sales fall as consumers become more cautious. I said that I was standing in the
“We are getting this double blow,” he said. “People are getting harder to find and costs are rising.”
According to a recent Alignable survey, only about one-third of small businesses Groves said it is making more than 90% of its pre-pandemic revenue.This is worse than the results of a similar survey conducted last year, with 42% saying he or 90% more of their pre-pandemic business.
“They sometimes have to dial back the hours they are open,” Groves said. It’s constant pressure.”
Workers are still in the driver’s seat — for now
Several factors combine to work against small business owners as they try to increase headcount.
“It’s not about healthy people of the right age looking for jobs,” said David Dollar, a senior researcher at the Brookings Institution.
There are many factors behind this, economists say: a continuing shortage of care workers, declining immigration rates and fears of a spreading pandemic.
“A lot depends on people’s confidence that they have the coronavirus under control,” Dollar said.
Edward Fox owns two franchises of Tradebank, a business barter service located in Wichita and Nashville, Kansas. When the Nashville-based sole employee retired at the end of 2020, he spent his six months searching but gave up and closed the office. As a result, he estimates he lost $200,000 to $300,000.
“I was hoping that the job market would recover and that more people would apply, but it just didn’t work out,” he said.
Fox said his ability to raise his salary was limited because the coronavirus has wiped out many of the barter deals his business brokered. About 75% of his business. With no one on site in Nashville, it was hard to recoup that revenue. “I think everyone is looking for the same workforce pool, but it’s hard,” he said.
Big hit from small business losses
“It would be a shame to see them go out of business. They wouldn’t want the retail sector to become more and more concentrated,” Holzer said.
With vacant stores settling on main streets across the country, consumers have fewer choices where to spend their money and workers have fewer places to look for work.
“When you lose your job, it reduces the health of the local labor market as a whole,” says Holzer. “It’s good to have options for workers as well as consumers.”
