Six reasons small businesses will find it easier to hire in 2022
It’s never been easy to find employees. Even before the pandemic, there were record high numbers of open jobs. Now that number is even higher: almost 11 million job positions not filled. Four million workers have gone missing, with many older employees choosing permanent retirement rather than returning to their jobs. Businesses are struggling to find good workers. This, in addition to inflation concerns, is what drove small business optimism levels to an 11-month low, according to this week’s survey from the National Federation of Independent Businesses.
Will the worker shortage end? Not anytime soon. But the supply of labor will be increasing significantly in 2022. And for six reasons.
Inflation. Consumer prices have risen 7 percent this year and – given what I’m seeing with producer prices, which represents products that haven’t yet come to market – we can all expect this rate of increase to continue for the foreseeable future.
Employers have responded. According to a monthly analysis of its payroll data, human resources giant Paychex reports that hourly wages are up almost 5 percent year over year (with businesses in hospitality and leisure paying 11 percent increases) and hourly wages now topping an all-time high of $30. Buried in the producer price index is an 11 percent rise in total compensation over the past 12 months. Returning workers – particularly younger workers who do entry-level jobs – are finding higher levels of compensation.
“The inflation, that’s starting to drive people back into the workforce,” Paychex CEO Martin Mucci told CNBC last week. “It’s tough to turn those wages back, so wage inflation is here to stay.”
Omicron is waning. Cases, hospitalizations and deaths are down. Vaccinations are up. Mask mandates, even in blue states, are being dropped. Schools are now mostly open for business and kids are consistently back in the classroom. As the weather warms, the variant will soon become a non-story…until the next variant arrives, of course.
But even when that inevitably happens, it’s likely to be weak, and most people have acclimated to living with COVID-19. Workers are becoming less concerned about closings and lockdowns disrupting their personal lives and are increasingly more comfortable returning to their jobs, and to normal life.
Government subsidies connected to the stimulus have mostly ended. There’s no more expanded child care credit (at least for now). There’s no more federal bump to unemployment insurance. Rent abatements are ending. Stimulus checks have been cashed. Big spending bills are on hold. People who can no longer rely on the government to make ends meet will need to get jobs — and more are doing so.
The pandemic bull market is on pause for 2022. From its low in March 2020 to the present, we saw the Dow almost double in value. Many individuals rode those gains and used them to buy homes, pay off debt and get their finances in order. But as interest rate increases loom and some of the big winners of the pandemic like PayPal, Zoom and Peloton adjust to a post-pandemic reality, most experts expect the markets to be somewhat volatile this year, with more than a few even expecting a correction. This uncertainty will push many back to the job market to replenish their 401(K)s.
Tech investments are starting to pay off. As I’ve written previously, many companies are replacing workers with robotics, self-service kiosks, artificial intelligence and workflow tools that are helping them pair down their payrolls. Of course, good workers will always be in demand, but the fruits of those investments will begin paying off in 2022 as companies feel less pressure to fill open jobs that can be done by machines. Look for this trend to expand in the years to come.
Finally, employers have learned some important lessons about their workers. Small business owners like me are waking up to a new workplace reality. People want flexibility. They want to work from home, at least some of the time. They need expanded benefits for mental health. They want to feel safe at work, both from COVID and from discrimination, harassment and a toxic environment. Many of my clients – even Gen Xers like me – are responding with expanded work-from-home policies, more resources for counseling and greater work/life flexibility options. All these new benefits are enticing to workers, and the companies doing this will find it easier to recruit this year.
Our labor challenges will never end, and finding good workers remains among our top issues for the foreseeable future. But I’m very optimistic that those challenges will ease in 2022 as we put the pandemic in the rearview mirror.
Gene Marks is founder of The Marks Group, a small-business consulting firm. He frequently appears on CNBC, Fox Business and MSNBC.
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