54% of Small Businesses Blame Extra Unemployment Benefit for Worker Shortage

Additional unemployment benefits is a leading reason for the shortage of workers. This was a key finding in Alignable’s May State of Small Business Report, which found 54% of small business owners blame extra unemployment handouts on worker shortages.

The small business referral network’s ‘Road to Recovery Report’ (May 2021) surveyed 7,751 small business owners from April 24, 2021 until May 9, 2021. The research found that 50% of small business employers are unable to fill vacancies.

Survey: Unemployment Benefits Causing Worker Shortage

54% say the reason they are unable to fill positions is because government unemployment handouts are preventing workers from applying. 30% of the small business owners surveyed believe the government’s $300 weekly supplemental benefit is encouraging people to stay at home and not apply for jobs. 24% say the stimulus checks are preventing people from applying for jobs. Stimulus checks are part of the American Rescue Plan Act 2021, which provides $1,400 Economic Impact Payments for eligible people.

21% said workers seeking a higher-paying profession is discouraging them for applying for jobs. 12% blamed the scarcity of applicants on a fear of contracting Covid a work. The same amount raised young patents being able to afford day care as the reason for a lack of candidates.

A Changing Recruitment Landscape

The Covid-19 pandemic has changed many aspects of life and work, and none more so than recruitment. Businesses have been forced to adapt to new working practices, including either increasing or decreasing workforces depending on the industry they operate in and business demand.

On a brighter note, Alignable’s report found that jobs are beginning to stabilize in the US, with 88% of pre-Covid employees being back on the payroll. This is an all time high in employment since the start of the coronavirus crisis.

That said, as optimism builds towards a late-summer recovery surge, many businesses are struggling to fill vacancies with appropriate talent.

Subsequently, many business owners are feeling frustrated and are pinning the blame on handouts being made by the government.

Alignable’s report featured quotes from small business owners related to their recruitment situation and their difficulty to fill positions. Some of the quotes read:

“Labor is extremely difficult to find and getting more expensive.”
“Unfortunately, so far, we’re seeing a lack of qualified workers for our industry.”
“We’re in a small town with limited talent.”

“The lack of interested (never mind qualified!) jobseekers is scary, even in the floral industry. Never have I seen so many opportunities posted, and even while offering $2 to $3 above minimum wage for entry level jobs, no one applies.”

Higher Wage Demands than Pre-Covid-19

Another key finding of the report is the growing demand for higher wages. 51% of the business owners surveyed said that when they hire people, they are having to pay higher wages that before the health crisis.

The impact of inflation on small business recovery was also explored in the report. It found that 67% of small businesses fear that inflation will deter recovery. These concerns are even more significant amongst industries facing supply shortages and delays, such as wood and metal.

The research also points to a gloomy revenue outlook. 58% of small businesses are only earning half or less of their monthly revenues compared to before the pandemic.

Alignable’s research confirms that despite industries opening up as lockdown restrictions are lifted, turbulent times are still ahead for many small businesses.

With recruitment proving challenging, small business owners may have to be more creative with hiring efforts. Such creativity could include using social media to source potential candidates, conducting online interviews, and even considering virtual reality to show candidates what it is like to work for their business.