What is the Impact of Low Unemployment on Small Business Owners?

Low unemployment numbers are great for the economy, but not always for small business owners. In late 2018, unemployment numbers in the United States dropped to 3.7 percent. According to a report from NPR, this was the lowest point in nearly 50 years. This means more Americans are working abd putting more money into the local economies. This is beneficial to business owners, because more money in the local economy means customers and clients have more to spend with businesses. But for small business owners considering making a hire, this lower unemployment number also means that the pool of available employees is shrinking. Here is what today’s business owners need to understand about the mixed blessing of low unemployment.

Many Small Businesses Concerned About Filling Available Positions

A strong economy means growth for small businesses, and with growth comes a need to hire additional employees. In a recent survey, 29 percent of small business owners indicated they intended to hire additional workers this year, and 18 percent stated they had open positions that they could not fill for at least three months. The problem is so strong that 19 percent of small business owners reported concern that they would not be able to fill vacant positions. Business owners are hiring, but they are struggling to find workers for the roles they have.

Potential Employees Have More Bargaining Power

When the potential pool of employees is smaller, small business owners need to realize that their potential employees have greater bargaining power. This means that the employer must create enticing job offer packages with benefits that will draw in skilled workers. This can make new hires a more costly investment for the business owner. To address this need, over half of the small business owners indicated they had increased wages offered for these new positions as a result of the shortfall, and 31 percent indicated they added paid training or education to make unqualified candidates qualified for open positions. Some, 12 percent to be exact, are even offering to pay off student loans to entice candidates.

Non-Monetary Hiring Incentives Becoming More Popular

With the tighter budgets of most small businesses, adding increased wages and additional monetary benefits does not always work. This means some small business owners must be creative in order to make their job offers more enticing. Non-monetary incentives are becoming typical in today’s job offers. For instance, offering a position with flexible hours or a flexible work environment can make the job more appealing. On-the-job training is also a benefit that costs little but adds appeal. This is one area where small business owners have an advantage over large corporations, because they have the flexibility to make these types of changes to make the job more appealing.

Clear Contracts Remain Critical

When hiring becomes more competitive, having a clear employment contract with potential new hires remains a top concern for small businesses. No matter what benefits you choose to offer to attract potential new employees, you need to ensure that those expectations and benefits are clearly outlined to those new hires, so there is no confusion. Employment contracts are a critical protection to your business, ensuring that the new hires know exactly what you are offering them and what their job will entail. The best way to ensure your business is properly protected is by getting professional legal help to draft employment contracts. The business law and contract attorneys at Lusk Law, LLC, are ready to help your Maryland small business create contracts that are an asset to you and your employees, so you can move forward with competitive job options that draw in the right people.