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Small businesses are bearing the brunt of the US labor shortage

A hiring sign is seen at the register of Burger Boy restaurant.
REUTERS/Amira Karaoud
A restaurant in Louisville, Kentucky is trying to hire workers.
  • Clarisa Diaz
By Clarisa Diaz

Things Reporter

Published

The release of the US labor market report on Aug. 6 was an encouraging sign for businesses. The unemployment rate declined from 5.9% to 5.4% in July, though it is still higher than the 3.5% unemployment rate pre-pandemic.

A closer look at the trends in worker movement by the sizes of businesses reveals the disparity between small businesses and larger ones.

US workers are quitting their jobs at elevated levels

Data from June show workers are quitting at historic levels, but it’s hitting small businesses much harder.

There are lots of open jobs

Across the board, there are more job openings than ever—a record 10.1 million jobs available. But there are more job openings at bigger businesses with over 250 employees.

Hiring is increasing faster at large businesses

Hiring for those job openings is improving but those 10.1 million jobs still haven’t been filled.  For the 4 million Americans who quit their job in April, the market of employers to choose from is still in their favor.

Smaller businesses have fewer resources to offer jobs compared to larger businesses that have more. Larger businesses can pay higher wages with a hiring rate that’s increasing more rapidly.

July’s employment gains occurred in leisure and hospitality, local government, education, and professional and business services. Two-thirds of the job gain in leisure and hospitality were in food services and drinking places. Bars and restaurants are bouncing back. Though, employment in leisure and hospitality is still down by 10.3% from its level in Feb. 2020 and these statistics measure a time before the Covid-19 delta variant was widespread in the US.

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