Unemployment 2020

Small businesses are having a hard time hiring, despite high unemployment

Justin Ho Oct 9, 2020
Heard on: Marketplace
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A waitress folds silverware at a restaurant in Youngstown, Ohio, in September. Small businesses are having trouble hiring even though millions of Americans are out of work. Megan Jelinger/AFP via Getty Images
Unemployment 2020

Small businesses are having a hard time hiring, despite high unemployment

Justin Ho Oct 9, 2020
A waitress folds silverware at a restaurant in Youngstown, Ohio, in September. Small businesses are having trouble hiring even though millions of Americans are out of work. Megan Jelinger/AFP via Getty Images
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You might think that in the middle of this pandemic economy, with millions of Americans out of work and the unemployment rate hovering around 8%, it’d be easy for businesses to find workers to hire right now. But a recent report from the National Federation of Independent Business found that over a third of small businesses have open positions they haven’t been able to fill.

About three weeks ago, Holly Dreeuws started looking to hire a few more workers for the pool construction company she runs in San Diego, California. She’s still looking.

“We cannot get somebody in to interview for the life of us,” she said. Dreeuws says she’s floored. “We get hits all the time, we call, we set up interviews and most of the time they don’t show.”

That usually doesn’t happen in a job market like this one.

“I can genuinely use this word — it’s unique. We’ve never seen this before. This is one of a kind,” said Nick Bunker, research director at the Indeed Hiring Lab.

Bunker said one unique factor is that many unemployed workers aren’t actually looking for new jobs. That’s because over a third of them are on temporary layoff, “which means they’ve been told they have a job to return to when the business can recall them,” he said.

As a result, the labor force is shrinking. Women have been dropping out of the workforce at high rates. Teresa Ghilarducci, professor of economics and policy analysis at The New School, said there’s another challenge for smaller companies: They often can’t afford to pay workers as much as larger businesses.

“They don’t have the same kinds of benefits that larger businesses do,” she said. “So you find that small businesses are plagued by a lot of turnover.”

Federal unemployment benefits have dried up, and the future of more government relief is unclear. Many big companies — including Disney, American Airlines and United Airlines — have announced new layoffs. Or that temporary layoffs they announced months ago are actually permanent.

“A lot of other businesses related to the travel industry are going to find that they can’t promise their laid-off workers that they’re going to come back any time soon,” Ghilarducci said.

As a result, she said, small businesses probably won’t have trouble finding workers in a few months.

COVID-19 Economy FAQs

How are Americans feeling about their finances?

Nearly half of all Americans would have trouble paying for an unexpected $250 bill and a third of Americans have less income than before the pandemic, according to the latest results of our Marketplace-Edison Poll. Also, 6 in 10 Americans think that race has at least some impact on an individual’s long-term financial situation, but Black respondents are much more likely to think that race has a big impact on a person’s long-term financial situation than white or Hispanic/Latinx respondents.

Find the rest of the poll results here, which cover how Americans have been faring financially about six months into the pandemic, race and equity within the workplace and some of the key issues Trump and Biden supporters are concerned about.

Are people still waiting for unemployment payments?

Yes. There is no way to know exactly how many people have been waiting for months and are still not getting unemployment, because states do not have a good system in place for tracking that kind of data, according to Andrew Stettner of The Century Foundation. But by his own calculations, only about 60% of people who have applied for benefits are currently receiving them. That means there are millions still waiting. Read more here on what they are doing about it.

What’s going to happen to retailers, especially with the holiday shopping season approaching?

A report out Tuesday from the accounting consultancy BDO USA said 29 big retailers filed for bankruptcy protection through August. And if bankruptcies continue at that pace, the number could rival the bankruptcies of 2010, after the Great Recession. For retailers, the last three months of this year will be even more critical than usual for their survival as they look for some hope around the holidays.

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