Despite a historically tight labor market, small business owners reported that hiring difficulties had eased in December, markedly improving compared to November, according to a poll conducted by Vistage Worldwide for the Wall Street Journal published Friday.
Of the roughly 650 small business owners polled, almost 25% reported that hiring was easier in December than at the start of the year, while just 20% said it was harder, according to the WSJ. In November, those numbers were 18% and 25% respectively, and some small business owners reported success thanks to pay raises and hiring freezes or layoffs at larger firms.
Through November, 59% of small business owners reported that the climate for small business in the U.S. was poor or fair, with 55% predicting that economic conditions were likely to get worse, according to a poll by the Job Creators Network. Small business owners often struggled over the summer to retain or attract employees, especially compared to larger companies that could outbid them, according to the WSJ.
Now, however, there is “a lot of pretty high-level talent in our industry that’s being displaced as part of this shift in the economy,” Chip Ridge, president of real-estate firm Millennial Title in Louisville, Kentucky, told the WSJ. “There’s potentially an opportunity for us to acquire some really experienced talent that in a normalized market we would never have the opportunity to get.”
A majority, 56%, still struggled to operate at full capacity as a result of hiring challenges, the WSJ reported. More than two-thirds of employers offered flexible hours while 84% raised wages in a bid to attract employees.
The labor market accelerated slightly in November, with the U.S. adding 263,000 jobs, but that slight growth from October’s 261,000 shattered analysts’ expectations of just 200,000. However, this job growth may have been boosted significantly by the double-counting of employees who work multiple jobs, Heritage Foundation economist E.J. Antoni noted to the Daily Caller News Foundation in early December.
Antoni estimates that roughly 900,000 of the jobs added this year were from individuals that were double counted.
The Federal Reserve expects that its historically aggressive campaign of interest rate hikes designed to blunt inflation will have a secondary effect of slowing the labor market, according to a statement by Fed Chair Jerome Powell on Dec. 14. The Fed believes that runaway inflation would ultimately hinder the labor market’s strength in the long-term, and that the unemployment rate will likely need to rise to roughly 4.6% by the end of 2023 — up from 3.7% as of November — in order to bring the labor market into balance.
“Reducing inflation is likely to require a sustained period of below-trend growth and some softening of labor market conditions,” Powell said Dec. 14. “We will stay the course until the job is done.”
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