Online small business network Alignable released on Sept. 7 the results of a survey it conducted. It found that a surprising 63 percent of small businesses cannot afford to hire more personnel, even when new employees are needed. What’s worse is that 10 percent of small businesses said they are actually laying off workers – a six percent hike from July.
The Alignable survey was conducted from May 10 to July 19, polling 5,350 small business owners.
Alignable said that labor is just one of various added costs that could endanger the stability of several small businesses. The others are rent hikes, rising inflation and increasing energy prices. (Related: THANKS, BIDEN: Small businesses struggle as highest inflation in decades wrecks US economy.)
Almost half of all small business owners surveyed, 47 percent, said that “their businesses are at risk of closing by fall 2022, unless economic conditions improve significantly.”
Experts blame COVID shutdowns for continuing struggles of small businesses
Most experts blame the Wuhan coronavirus (COVID-19) shutdowns imposed by the government for the continuing struggles of small businesses.
“Beyond the skyrocketing price of labor, only 23 percent of small business owners say they have fully recovered financially from the worst years of COVID, down two percent from July and down 20 percent from December 2021. This 23 percent recovery rate is the lowest the Alignable Research Center has seen in more than a year. Looking only at August revenue, 51 percent of all small businesses generated half or less of their pre-COVID monthly earnings, up 13 percent from 38 percent in July,” the Sept. 7 report stated.
In spite of the depressing figures, some economists remain optimistic about the immediate future.
Job openings exceeded job applicants in July by almost a 2-to-1 margin as reported by CNBC. Average hourly wages have also moved up substantially to $30.17 in August, up $1.51 from the same period last year. With workers in comparatively limited supply but in high demand, the increase in labor costs makes sense.
But small business owners seemed resigned to inactivity and extended gaps in operation for the immediate future.
“While some small business owners admit they just gave up on hiring more staff, the majority note that it’s just too expensive to do it in this economic environment,” the survey stated.
Small business owners have struggled to fill vacant positions for more than a year, and while 51 percent are still seeking to find workers for those positions, there has been a meaningful shift in the job situation this summer.
According to Alignable’s July Hiring Report, 45 percent of small business owners said they have put any hiring on hold, mostly due to the huge labor costs and soaring inflation. An average of four percent, meanwhile, stated that they are beginning to decrease their personnel to boost the financial health of their businesses.
The report added that only 26 percent of all small to medium-sized businesses said they have fully recovered to pre-COVID pandemic revenue levels and 60 percent stated that their labor costs have increased. It also reported that 18 percent said that wages needed by workers are now 25 percent higher than they were before the COVID pandemic.
Apart from responding to labor costs and inflation, many poll takers also mentioned that they are preparing for the negative effects of a possible recession.
In a similar survey of 4,739 small business owners done last June 23 to July 19, 48 percent stated that they believe that country is already in a recession while another 32 percent foresee that it is happening later this year.
Some owners stated that they have learned to live without the additional workers while doing other changes and/or working extended hours themselves.
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