Jefferson City, MO 75° View Live Radar Sat H 80° L 62° Sun H 79° L 70° Mon H 89° L 67° Weather Sponsored By:

Low unemployment, high job growth create hiring problems for businesses

Low unemployment, high job growth create hiring problems for businesses

July 21st, 2019 by Emily Cole in Local News

Julie Smith/News Tribune AJ Underwood operates a machine welder that has to reach a very high temperature to weld the pieces of rubber membrane together to prevent water from permeating the material. Underwood and fellow employees of All Seasons Roofing work early Friday to get in a day's work before it got too hot to continue.

Small businesses across the country are growing at a brisk pace, and they are in turn offering more jobs. But finding qualified employees to fill those jobs has become a challenge.

In a June 2019 report, the National Federation for Independent Business found small businesses — those with 500 or fewer employees — added an average of 0.21 workers per firm, with 12 percent of owners reporting an increase, on average, of 4.3 workers per firm.

Missouri added 28,900 non-farm jobs in the last year, according to the Missouri Department of Economic Development; 3,937 jobs were added in June.

Despite rises in opportunity for employment, small-business owners are having trouble hiring and keeping employees. The NFIB report found 58 percent of owners reported trying to hire, but 86 percent of those had few or no qualified applicants.

Over all industries, 21 percent of owners said the difficulty of finding qualified workers was the single most important business problem, according to the report.

Brad Jones, Missouri state director for the NFIB, said the No. 1 issue is finding people to work. Part of the cause of the issue is the low unemployment rate, he said.

As of June 2019, the U.S. unemployment rate was at 3.7 percent, according to the U.S. Department of Labor. The rate has declined in the last two years, down from 4.3 percent in June 2017.

In some parts of Missouri, Jones said, the rate is even lower — less than 3 percent. The unemployment rate in Cole County in 2018 was 2.7 percent, according to the Missouri Department of Economic Development.

Jones said the negative impact of low unemployment is that businesses are having a hard time finding people to work for them.

"We've got an economy that's humming along at a 2.5-3 percent growth rate," Jones said. "We're adding hundreds of thousands of new jobs every month, and at some point, the lines tend to cross, and the jobs become more scarce as the demand for labor increases. It's as much a big-business problem as it is a small-business problem."

Related Article

Missouri treasurer announces natural disaster business loan program

Read more

Missouri has many small businesses. As of March 2019, 79 percent of employers in the state have 10 or fewer employees, according to the Missouri Division of Employment Security.

Paula Benne, owner and president of Jefferson City employment agency C&S Business Services, said she has noticed the lack of job seekers versus open positions and agreed the extremely low unemployment rate is a big factor.

"I've done this for 30 years, and I've not seen it quite this tight, as far as the need," Benne said. "Small businesses are hurting; large businesses are hurting."

Some industries are affected more than others, according to the NFIB report. Thirty-nine percent of transportation owners and 37 percent of owners in construction cited it as their No. 1 business problem.

Rachel Busche, owner of All Seasons Roofing in Jefferson City, said she has noticed this issue locally.

"I think all of them are having those problems," Busche said. "There's just not enough people that want to do (the jobs)."

Missy Bonnot, director of economic development for the Jefferson City Area Chamber of Commerce, said the chamber has heard about these issues locally with trade jobs.

"We hear a lot from our electricians, plumbers and contractors that a lot of individuals don't want to go into those careers anymore, so there's fewer and fewer people that want to go in those types of trades," Bonnot said.

In industries such as transportation and construction, applicants' skill may be the biggest issue. According to the NFIB report, 90 percent of openings in construction were for skilled workers. In transportation, skilled positions made up 87 percent of openings.

Jones said it's an issue of businesses being able to find the right people.

"It's making the fit — having a good fit where you're getting somebody that actually has the skills that you're looking for," Jones said.

Busche said filling positions has been difficult at her business.

"We have problems all the time," Bushe said. "It's almost like we're always hiring. All of the trades are suffering now for good help. (The applicants) are not skilled and just don't have a good, solid work ethic."

Randy Allen, president and chief executive officer of the Jefferson City Area Chamber of Commerce, said part of the issue may be a generational change.

"It's increasingly a problem, and some of it obviously is the generational change — the younger folks not wanting to work in those industries," Allen said.

However, Jones said, there has been an increase in trade school enrollment, but there are still two or three jobs available for each person who attends a trade school.

The lack of qualified employees can have an effect on some businesses, Jones said, like limiting business growth.

"For a small business, maybe you don't take as many jobs as you possibly could've maybe you have to hold back on the number of orders you could fill because you only have X number of people," he said.

In order to attract more employees, businesses need to adapt, Bonnot said.

"These companies are having to change and be creative, as far as what they do for their workforce, that they've never had to do before," she said.

One strategy is to increase compensation.

According to the NFIB's May 2019 jobs report, 34 percent of small-business owners reported paying higher wages in April.

"Businesses are competing for talent, so they're increasing their beginning salaries," Benne said. "Talent is hard to come by — skilled to unskilled, the demand is quite high."

However, one thing that continuously comes up is flexibility. Allen said employees now, especially of younger generations, care about having a flexible schedule and are more likely to choose a job that fits that desire.

"Small businesses just have to adapt," Allen said. "It's hard when you have a restaurant or something — you need people when you need them. But it's that tension of what the employee wants and what the employer needs."

Benne said flexibility is in the top five of desires for employees, although salary can't be discounted either. She said she's unsure what exactly businesses can do.

Despite the numbers in the report, Jones said it's not all negative.

"Just because it ticked down one month, the sky is not falling — the small-business economy is the strongest it's been in 10 years," Jones said. "You'll see it go back up."

Small businesses in downtown Jefferson City don't seem to be widely affected. Several businesses, including Sweet Smoke BBQ, Downtown Book & Toy, Southbank Gift Company and American Shoe, reported not having any issues with hiring or keeping employees.

"I think we're in good shape in Missouri, and I think we're in really good shape in Jefferson City," Jones said. "We're certainly not immune from the labor shortage, but from an economic standpoint, we seem to be doing pretty good here in JC."

Related Article

State unemployment remains steady at 3.3%

Read more