MetLife and the U.S. Chamber of Commerce Small Business Index fell this quarter due to a worsening economic outlook. Only a quarter (25%) of small businesses say the U.S. economy is doing well, and 30% say their local economy is doing well, both down 8 percentage points from last quarter.
At the same time, small businesses remain positive about the health of their businesses. Almost two-thirds (64%) of small businesses say their business is in very or somewhat good health. Additionally, two-thirds (67%) of small businesses say they are somewhat or very satisfied with their cash flow, down slightly from the previous quarter (72%) this time last year. (67%).
The index score for the third quarter of 2023 fell from 69.2 to 61.3, returning to the score seen at the beginning of this year and at the end of 2022.
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Most people feel a shortage of workers…
Over the past few quarters, small businesses have expressed consistent concerns about having adequate workers. In fact, more than half of those looking for talent in 2023 say they have difficulty finding candidates with the experience (54%) or skills (52%) their business needs.
Additionally, most small businesses say they are experiencing a labor shortage, with a majority (53%) of small businesses agreeing that there is a labor shortage locally.
Almost half of small businesses report searching for, hiring, or interviewing new talent in 2023. This is a significant increase since mid-2021. 45% of small businesses said they looked for new talent this year, up from 36% of businesses who said so in fall 2021.
…and struggling to meet workers’ pay demands.
Naturally, in this atmosphere of increased competition for workers, employers must do everything they can to find and retain talent.
Almost half of those who reported looking for new workers in 2023 said it would be difficult to offer competitive pay and benefits.and 60% all Small businesses agree that it is difficult to continue to meet the salary expectations of existing employees.
We also offer new and unique benefits. The most popular strategy is offering flexible work schedules, with 68% of small businesses saying they plan to do so within the next year. Additionally, half (50%) of small businesses say they offer raises, paid sick leave, and publish hourly wages and pay ranges for each open position.
To address labor shortages, small businesses are considering their own talent pools
Small businesses are actively considering workers from often overlooked talent pools to find more workers.
Nearly three-quarters (71%) of small businesses agree that employers should more often consider hiring from talent pools such as former incarcerated individuals, veterans, military spouses, and immigrants. I am. Additionally, a majority of small businesses (54%) believe the U.S. should issue more skilled worker visas each year to help businesses hire the workers they need.
Inflation remains the biggest concern
Despite growing concerns about employment, inflation remains the biggest challenge for small business owners.
For the sixth consecutive quarter, more than 50% of small businesses cited inflation as one of their biggest challenges. But this concern may be starting to level off. Concerns about inflation have remained stable at 52% to 54% over the past year.
The second biggest concern for small businesses is revenue, with 22% citing this as their top concern.
On the other hand, small and medium-sized enterprises' concerns about supply chain issues are waning somewhat. Supply chain issues are tied for fourth place (17%) as the most challenging issue reported among small businesses this quarter, along with employee benefits and healthcare provision.
The index's overall score fell to 61.3 from 69.2 in the previous quarter. This is close to the overall sentiment this time last year.
The SBI Survey for Q4 2023 was conducted from October 5 to 24, 2023. To explore and view additional findings from this quarter, as well as years of small business data, please visit https://www.uschamber.com/sbindex/.
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About the author
Thaddeus is a senior writer and editor on the U.S. Chamber of Commerce's Strategic Communications team.