Based on the latest data from U.S. small businesses, the demand for labor has declined again, with nearly two out of every three (63%) putting their hiring on hold because they can’t afford to add staff, and 10% of that group is laying off workers.
This decline is quite significant, as it’s 18% higher than it was in July (at just 45%). Beyond that, the percentage reducing their staff jumped 6% to 10% this month from just 4% in July.
Reasons for the drop in hiring among small business owners in both the U.S. and Canada revolve around cumulative inflation struggles, including astronomical labor costs, increasing rent, and higher-than-usual supply and energy expenses.
Other factors include months-long searches for labor that resulted in very few hires (if any), high turnover rates, being forced to reduce their hours or close locations, and a decrease in consumer spending.
While some small business owners admit they just gave up on hiring more staff, the majority note that it’s just too expensive to do it in this economic environment.
Beyond the skyrocketing price of labor, only 23% of small business owners say they have fully recovered financially from the worst years of COVID, down 2% from July and down 20% from December 2021.
With labor costs and other expenses climbing, and revenue dropping, this double-whammy effect is forcing many small businesses to hold off on hiring, while 10% are laying off their staff to stay afloat.
The other group seeing a 19% increase are the nonminority-owned businesses, with 64% now saying they won’t hire, up from 45% in July. Minority-owned businesses are in the same boat with 63% refraining from hiring now, up 5% from July.
Finally, 47% of veteran-owned businesses report they’re not recruiting or hiring right now, up from 40%.
To review past poll results, go to the Alignable Research Center.