The cost of hiring crunch can reduce small business revenues

The cost of hiring crunch can reduce small business revenues

The cost of hiring crunch can reduce small business revenues

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This story originally appeared on The Epoch Times

Target and other large companies are reporting record earnings, but smaller firms report that they have difficulty hiring workers. This is hurting their bottom lines.

A new survey by Salesforce (pdf) shows that 53.3 percent of small and medium-sized businesses said staffing issues have been a drag on revenues. For those businesses that said hiring woes were pressuring profits, 56.6 percent reported a hit to revenues of at least 11 percent.

Small business owners were also surveyed by the National Federation of Independent Business for their July Jobs Report. It found that 49% of respondents reported that they had no job opportunities, a record of 48 years. Small business owners still have high expectations for filling open jobs and are increasing wages in order to lure workers.

Small business owners still face a problem in finding qualified employees. According to the report, 93 percent reported that they had difficulty hiring staff. However, the biggest concern was the quality of labor.

NFIB Chief Economist Bill Dunkelberg stated that small business owners had difficulty finding qualified employees for open positions. This has impacted business activity during the summer season. To attract employees, owners are increasing their compensation levels to the highest level in 48 years.

A separate NFIB survey indicated that most small businesses said earnings trends over the last three months dropped by eight points to a net negative 13 percent. 32% cited lower sales and 31% attributed rising material costs. 10% blamed labor cost.

Larger companies have reported earnings growth that is higher than expected. According to FactSet, of the 91% S&P 500 listed companies reporting revenue figures for the second quarter they reported, only 87 percent reported higher revenues than the average estimate.

John Butters (Vice President and Senior Earnings Analyst at FactSet) stated in a statement that “the second quarter will see the highest percentage S&P 500 businesses reporting revenues higher than estimates for a quarter”

Target is listed on S&P 500 and reported Wednesday that its second quarter sales increased in all merchandise categories, helping it surpass earnings estimates.

Bloomberg asked Target’s chief financial officers if they were having trouble finding people to fill the vacancies. The number of vacancies has risen to an all-time high in America.

“What we see as a company maybe won’t be what you hear everywhere else,” Target CFO Michael Fiddelke told Bloomberg in an Aug. 18 interview.

Fiddelke stated that Target’s ability to recruit and retain employees is strong. He attributed Target’s success in hiring to its long-term investment strategy, which places a high value on staff.

He said that “that’s not an approach that you can change on the whim–it must be part of your company’s ethos” and that it “really helps us in this current climate.”

Job openings in the United States surged to a record high of 10.1 million in June, while hiring lagged behind that figure by over 3 million, painting a picture of an economic recovery held back by hiring woes.

This is the largest number of jobs the economy has had in a long time. This historically elevated level makes clear that we have a severe worker shortage that threatens what should be a prolonged economic boom,” Curtis Dubay, senior economist at the U.S. Chamber of Commerce, said in a note.

Layoffs, meanwhile, remained at a record low for the second month in a row on the last business day in June, according to the Labor Department’s most recent Job Openings and Labor Turnover Survey (JOLTS) report.

Tom Ozimek

Tom Ozimek is a journalist, marketer, communications and marketing expert with a background in adult education, journalism and deposit insurance. Roy Peter Clark has the most valuable writing advice. He says, “Hit your target” and “leave it for last.”

Publiated at Wed 18 August 2021, 17:39.44 (+0000).

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