Small businesses find some relief from hiring woes

Small-business owners say it is getting easier to hire workers and keep them around, in what they hope is a sign that the worst of their labor problems are behind them.  

The U.S. job market remains historically tight. However, December marked the first time since July when more small-business owners said in a survey for The Wall Street Journal that they found it easier—rather than harder—to find workers. 

Some entrepreneurs say steps such as raising pay, adding apprenticeship programs and rewriting job ads are starting to pay off. Others report an increase in applicants as competitors pull back on hiring or begin layoffs.

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UnaliWear Inc., a maker of medical-alert wristwatches, struggled this summer to keep new employees on the job. "They would ghost us," said CEO Jean Anne Booth, who has 17 employees. "They would accept the job, show up one week, and never show up again."

This fall, the Austin, Texas, company increased starting pay from $15 an hour to $18 an hour, and added a $1-an-hour raise after six months, aiming to put pay more in line with other local employers. "Right now, for the first time in a while, we are fully staffed," Booth said. 

Nearly 25% of the more than 650 entrepreneurs in the December survey said it was easier to fill job openings now than at the start of 2022—an increase from 18% in November. Meanwhile, 20% said it was harder to fill open positions, down from 25% in November. The survey is conducted for the Journal by Vistage Worldwide Inc., a business-coaching and peer-advisory firm. 

The shift is modest and comes as unfilled job openings continue to weigh on many small businesses. Of those surveyed, 56% said hiring challenges made it difficult to operate at full capacity. Eighty-four percent of small-business owners reported raising wages in response to labor-market challenges, and more than two-thirds reported offering flexible hours and schedules. 

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In some sectors, economic worries are creating opportunities to add talent. "We have seen it be a little easier, mostly because some of our competitors are slowing down," said Dale Lemmons, owner of Signature Transport Inc. and Interstate Wood Products Inc., two trucking companies in Kelso, Washington, that together have about 125 employees. "It’s not quite the hot job market it was."

Over the past 18 months, Lemmons has boosted pay by 20% for entry-level truck drivers, and by as much as 40% for those with at least three years of experience. About 25 people have gone through a paid apprenticeship program launched this January, with another seven currently in training. 

Chip Ridge, president of Millennial Title in Louisville, Kentucky, said he is hoping to make strategic hires in early 2023 as the housing and mortgage-lending industries continue to contract in response to higher interest rates and slowing sales. 

"There’s a lot of pretty high-level talent in our industry that’s being displaced as part of this shift in the economy," said Ridge, who has 33 employees. "There’s potentially an opportunity for us to acquire some really experienced talent that in a normalized market we would never have the opportunity to get."

At Water Tech Corp. in East Brunswick, New Jersey, an ad for a logistics position drew three applicants early in the year and then roughly 100 applicants this summer. "There were definitely more candidates, but we’re still not seeing the right candidates," said owner Guy Erlich, who has about 40 employees and sells battery-powered vacuums to clean swimming pools. 

Erlich believes the jump in applicants reflects hiring freezes at larger companies. He expects the number of more qualified candidates to increase in coming months, as large companies that expanded logistics operations in response to supply-chain shortages pull back now that they have too much inventory.

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For other small businesses, hiring remains as difficult as ever. Staffing shortages have led Doetsch Environmental Services in Warren, Michigan, to frequently send out crews staffed by three people instead of four. The company, which specializes in cleaning underground sewer systems, has 50 employees and 20 job openings.

"We are asking people to do more with less," said Joe Schotthoefer, vice president of operations and the fifth generation of his family to work in the 124-year-old business.  

Signature Transport, in Kelso, Washington, has had an easier time hiring truck drivers after boosting pay and introducing an apprenticeship program.

Doetsch has increased starting pay by roughly 30% in the past 18 months and compressed the schedule for earning raises. It spends more time talking with job candidates about company benefits and prospects for advancement. 

More applicants are responding to job postings, "but we still don’t get them into the interview," Schotthoefer said. New, unqualified candidates come in expecting to be paid at the same rate as employees with 10 or more years of experience, he added.

Competition from larger companies with richer pay-and-benefits packages remains a challenge. D2 Solutions, a strategic consulting and technology firm focused on hospitals and the life-sciences industry, recently lost a senior sales executive to a pharmaceutical company offering a 40% raise. "It was significantly more than what we can afford to pay them as a small company," CEO Dean Erhardt said.

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Overall, small-business confidence improved in December by the largest amount in 21 months, according to the Vistage survey, with the largest monthly gains in assessments of the national economy.

Higher small-business confidence likely reflects an easing of inflation, as price increases for goods, services and other inputs slowed, said Richard Curtin, a University of Michigan economist who analyzed the data. Net hiring plans were the most expansive in nine months, he added.

Steven Smithing, the owner of restaurants in the Nashville, Tennessee, area, Mere Bulles and Green Hills Grille, said more people are eating out more often. This Thanksgiving, for the first time in a decade, he did not have to call on his four children, ages 14 to 24, to help fill shortages in holiday staffing. Hourly wages are up nearly 21% from December 2020, he said.

"For the first time in a long time, I don’t need managers either," said Smithing, who has about 160 employees. "All of a sudden I had more employees. It feels like we are starting to have some traction."

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