As Job Market Cools, Small Businesses Scramble for Employees

Back when giant corporations were snapping up all the talent, it was hard to be a little guy. But it’s their turn now.

As the country’s largest companies have begun readjusting their balance sheets and slowing down hiring, small businesses are hanging up “Help Wanted” signs at a record pace, The Wall Street Journal reported.

Think Smaller

During the pandemic, many sectors — especially tech and finance — went on hiring sprees, offering increased wages and more attractive benefits to new workers. That meant smaller businesses just couldn’t compete, as the “quiet quitting” phenomenon was in hindsight mostly people just trading up for higher-paying jobs.

It all came tumbling down rather quickly with the likes of Meta, Alphabet, Salesforce, Goldman Sachs, and more laying off tens of thousands of employees as covid fears eased and the world started to feel more like the before times. Overall, there’s been a general cooldown in the labor market, and the unemployment rate, while still historically low, is on the uptick.

Now, the hiring has shifted. While large companies take a wait-and-see approach before expanding their workforces, small businesses, which boomed in numbers post-pandemic as remote work sparked more companies into existence, finally have some wiggle to fill their own positions:

• Establishments with 1 to 9 employees accounted for 21% of all job openings in September, the highest share on record dating back to 2000, the WSJ reported. Meanwhile, hiring at businesses that employ anywhere from 10 to more than 5,000 workers dropped.
• But more open positions at small businesses doesn’t mean they’re getting filled. “Many of them are still experiencing lost sales opportunities because they’re not staffed as they want to be,” Holly Wade of the National Federation of Independent Business, told the WSJ.

The Fed Conundrum: With a widespread labor cooldown, wage gains are easing, too. Big companies are no longer fighting for workers, so they don’t have to offer extravagant salaries and holistic benefits. In the 12 months through October, average hourly earnings rose just 4.1%, the smallest increase since June 2021. That’s good news for the Federal Reserve, which wants to see inflation settle down toward 2%. But it’s potentially bad for American households, especially those making less than $50,000, if wages stop outgrowing inflation.