Tight labor market cuts into small business hiring
Hiring at small businesses in March dropped to its lowest level in years amid a tightening labor market that is making it harder to find qualified employees.
Paychex, a human resources firm, released a report that found hiring at small businesses fell to its lowest point in March in more than seven years.
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Martin Mucci, Paychex president and CEO, told CNBC that the top problem for smaller businesses is “finding and recruiting the best workers that are qualified for the job.”
“So small businesses have a little tougher time than large businesses when the unemployment rate is where its been, at 4.1 percent for five months now, at such a low rate,” Mucci said.
He said small businesses don’t have the recruiting strength and resources of larger firms to find the workers they need as the labor pool shrinks.
The Small Business Jobs Index fell 0.12 percent in March and dropped 1.07 percent from a year ago, the report showed.
Mark Zandi, chief economist for Moody’s Analytics, said small business hiring is weakening because those firms can’t fill open positions.
The small business survey by the National Federation of Independent Business showed recently that a near-record one-third of businesses say they have at least one open position that is hard to fill, Zandi said.
“Small businesses would be the first to struggle with a labor shortage problem, as bigger companies have more resources to fill their open spots,” he said.
Hourly earnings continued to rise in March, according to the report, which found that small business wages saw a 2.66 percent annual growth rate last month.
The report found that the national hourly earnings last month were $26.48.
“Interestingly, as job applicants are scarce, this month, we saw one-month annualized hourly earnings increase by nearly three percent among small businesses, compared to the annual growth rate of 2.66 percent,” Mucci said in a statement.
“This could be the beginning of accelerating wage growth to attract more employees.”