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Seeming to confirm concerns about workers being reluctant to re-enter the workforce, the National Federation of Independent Business’ (NFIB) latest Small Business Optimism Index rose to 99.8% in April, up 1.6% from March. The index has increased nearly five points since the beginning of the year but nearly half of business owners report job openings going unfilled.
NFIB Georgia Director Nathan Humphrey said, “In Georgia right now, there are more job openings than job applicants. Owners are offering higher wages, but people still aren’t applying. Hopefully, if Governor Kemp ends federal pandemic-related unemployment subsidies, more people will to return to the workforce.”
More than a quarter of small business owners reported plans to invest in their businesses over the next three to six months, an indicator these business owners are predicting growth this year. Earnings trends are up eight points over the last three months.
On the other side of the ledger, the Uncertainty Index dropped one point to 80 as businesses are slowly feeling more confident the economic recovery is in full swing. Somewhat curiously considering other results of the survey, the percent of business owners expecting better business conditions over the next six months dropped seven points to a net negative 15%, “surprisingly glum” said the survey report.
Nearly half of respondents reported new capital outlays in the last six months, possibly an indicator of optimism for future growth or business owners taking the moment of slowdown to re-invest and ready themselves for whenever the economy does get into the swing of recovery.
The worker shortage has been a much-talked about concern but only eight percent cited labor costs as their top business problem, but 24% said labor quality was their top business problem. Labor quality remains the top overall concern. Despite the concern, 21% of respondents plan to increase employment but only 14% report that now is a good time to expand.
“Small business owners are seeing a growth in sales but are stunted by not having enough workers,” said NFIB Chief Economist Bill Dunkelberg. “Finding qualified employees remains the biggest challenge for small businesses and is slowing economic growth. Owners are raising compensation, offering bonuses and benefits to attract the right employees.”
Even President Joe Biden acknowledged the workforce shortage problem at a press conference on Monday. “The law is clear: if you’re receiving unemployment benefits and you’re offered a suitable job, you can’t refuse that job and just keep getting the unemployment benefits,” Biden said at the White House. “No one should be allowed to game the system and we will insist that the law is followed.”
Though the White House has yet to indicate what rules might be changed to encourage workers to rejoin the workforce or about better enforcement of existing rules.