Labor shortages pose grave challenge to small business owners
Ongoing labor shortages, the Omicron variant of COVID-19 and supply chain constraints continue to plague small businesses struggling to weather the persistent, nearly two-year-long pandemic.
In fact, a large majority of small business owners say they need more federal aid if they are going to stay afloat.
Eighty-two percent of more than 1,400 small businesses surveyed by Goldman Sachs' 10,000 Small Businesses Voices, a small business advocacy group, say they need more emergency financial assistance from the federal government, like the aid that was provided through the COVID-Economic Injury Disaster Loan (EIDL) program, which expired at the end of 2021.
Eligible businesses could apply for low-interest, fixed-rate loans to make up for pandemic-related losses.
But without more federal aid, a wide range of establishments report being on the brink of failure, citing rising COVID-19 cases, hiring and supply chain hurdles.
"When it comes to additional federal aid, we saw overwhelming support for it in our survey. Small business owners, if you talk to just about any of them, don't want a handout," said Joe Wall, national director of the Goldman Sachs program. "I think what they want now is for the federal government to reopen some loan programs — not grant programs — loan programs that expired at the end of the year."
Due to the rise in the number of cases of the Omicron variant of COVID-19, 37% of small business owners said they had to temporarily close or reduce operations in tandem with the recent spike in infections.
Recruiting troubles
Labor shortages were overwhelmingly cited by small business owners as the most significant challenge they face, with 87% of those hiring reporting difficulties filling open positions.
What's worse is that 97% of small businesses seeking to hire new workers said hiring and retaining their workforces is hurting their bottom line, according to the Goldman Sachs survey. Many companies, including those in consumer-facing industries like restaurants and retail, report having to raise employee wages and offer better benefits to attract talent.
"Part of it is the competition is hot and a lot of the larger corporations are able to offer greater benefits, greater pay," Wall said.
Inflationary pressures combined with supply chain snags have also worsened the business landscape for smaller outfits, more than half of which say their suppliers are prioritizing larger businesses' higher-volume orders. A majority of businesses affected by supply chain constrains expect these kinds of challenges to continue for more than six months, too.
"Approaching the second anniversary of the onset of the pandemic, it is abundantly clear that small business owners across the country are facing more challenges than ever and simply cannot catch a break," said Jessica Johnson-Cope, chair of Goldman Sachs' 10,000 Small Businesses Voices National Leadership Council and president of Johnson Security Bureau in New York City. "The relentless pressures to pivot brought by this never-ending pandemic, coupled with the difficult labor market, inflation and supply chain constraints are all pushing small businesses to the brink."