Tariffs have squeezed labor market, small businesses say after Fed investigation

The Justice Department has opened an investigation into the Federal Reserve and Chair Jerome Powell. At face value, the probe is focused on statements Powell made during a hearing about Fed office building renovations. But Powell says the investigation is "an unprecedented action [that] should be seen in the broader context of the [Trump] administration's threats and ongoing pressure" to lower interest rates.

If the central bank was brought under political control, it would mean the end of the Federal Reserve's "dual mandate" — to keep prices stable and keep employment steady. Those are two things small businesses are now thinking about.

Small business owners seem particularly concerned about the tight labor market, said Holly Wade, executive director at the National Federation of Independent Business Research Center. 

“One in five small business owners say labor quality is their single most important problem in operating their business,” she said.

That means they can’t find qualified candidates for open positions. Wade said small businesses in construction and transportation, for example, still face challenges finding and retaining workers with specific skillsets.

Dwayne Groll, CEO of Environmental Design Group in Ohio, knows that dynamic firsthand.

He and the 130 employees at the civil engineering and construction services company deliver designs, oversee clients, and help clients raise funding.

“Our business is based on professional services,” Groll said. “We can’t do that without hiring the best and keeping them. And it’s challenging when we have a year or two search for someone to fill a position.”

Groll said he’s looking to hire at least five more experienced employees, and he’s raised compensation to retain staff.

NFIB said that stable prices — in other words, keeping inflation under control — is a top concern of businesses in retail, particularly ones that depend on imported goods.

Matthew Hassett, CEO of Loftie — a 10-person company that sells clocks and lamps to help with sleep — said tariffs have made a big impact.

“We didn’t have extra money sitting around waiting to pay for these tariffs,” he said. “We could either cut expenses or raise prices. And so we’ve cut everything we can… and there’s no more to cut.”

That includes cutting consultants and leaving an open position unfilled.

Hassett has raised prices, too. The lamps that Loftie used to sell for $275 are now almost $300.

He said there’s been a lot of unpredictability in the U.S. economy, so he’s hoping to sell more product outside of the country in the future.