Big February job growth for economy, but on Main Street it's still a struggle to find workers

The latest nonfarm payrolls report shows a labor market nearing a recovery to pre-pandemic levels, but small business owners across the U.S. say that finding and keeping qualified employees remains one of their biggest challenges.

February job growth posting its biggest monthly gain since July, with nonfarm payrolls for the month rising by 678,000 and the unemployment rate at 3.8%, its lowest level since before the pandemic, the Labor Department’s Bureau of Labor Statistics reported Friday.

Across 2021, 6.665 million jobs were added in the U.S., a figure noted by President Joe Biden in this week’s State of the Union address as the largest single-year gain in American history. With the bounce back, the job market is about one million (1.14 million) employed workers short of where it was pre-pandemic, but there is still a large gap in filling open positions, which stood at over 10 million at the end of last year.

Main Street is one area where this labor struggle remains. In February, companies with 500 or more workers added 552,000 positions, according to ADP’s private payrolls report from earlier this week. That was responsible for almost all of the job gains tracked by ADP, while companies with fewer than 50 employees recorded a loss of 96,000 employees during the month.

Fifty-two percent of all small business owners said that it has gotten harder to find qualified people to hire compared to a year ago, according to a recent CNBC/SurveyMonkey Small Business Survey covering the first quarter of 2022. That is up from 50% in Q4 2021.

Twenty-nine percent of small business owners also said that they have positions that have been open for at least three months that they’ve been unable to fill, and 77% of the small businesses with more than 50 employees saying that they expect turnover to likely be a problem for their business six months from now.

“Every data point from every possible source that we have on the economy right now is indicating that we’re in an incredibly challenging hiring market,” said Laura Wronski, senior manager of research science at SurveyMonkey, which conducts the survey for CNBC. “The unemployment rate is low but inflation is high, so wages have to be high to attract workers.”

The latest nonfarm payroll report shows a softening in the sharp wage inflation, as wages were up just 1 cent an hour, or 0.03%, compared to estimates for a 0.5% gain. The year-over-year increase was 5.1%, well below the expectation of 5.8%.

Wronski said that while there has been an influx of newly eligible workers looking for new jobs amid the ‘Great Resignation,’ “it hasn’t gotten easier for small businesses to hire.”

The latest data from NFIB’s monthly jobs report in February showed 22% of small business owners reporting that labor quality was their top business problem, and the percentage who cited labor costs as the top business problem remained near a recent 48-year record high.

Jennifer Park, the owner of WearEver Jewelry in Alexandria, Virginia, said that she has not only been challenged to find qualified employees but to keep those she hires as well.

After an employee left her role to take care of her child in July, Park said she posted a job listing on SimpleHired, which garnered her just 21 applicants over a two-month period. While she hired someone from that process, that person just quit three weeks after starting without notice, leaving her back at the starting point. She also hired someone who worked for roughly two weeks but then tested positive for Covid-19 and stepped away following that, and she has had several applicants just not show up for scheduled interviews.

“It takes a lot of time to look for people, a lot of time and money to train them, do background checks, and really show them how to do this job,” Park said. “It’s just been super frustrating.”

Park said that she believes a few factors are playing into why it has been so hard to find new employees, with one of them being that many workers, especially women, are having to stay home to take care of children.

Recent research from the National Women’s Law Center suggested that were nearly 1.1 million fewer women in the labor workforce in February 2022 compared to 2020 while men have recouped all of their job losses since the pandemic began, a gap that is being furthered by childcare concerns.

“We’re not even getting those kinds of applicants, because if they have little children, they’ve had someone to care for them or they haven’t had school to send them to,” Park said.

She also noted the realities of working in a retail environment for a small business, which often requires weekend work, as being “lower on the rung” compared to other jobs that are out there.

While Park said she has tried to increase the perks that she’s offering and has increased the opportunity of things like sales commissions, she is also facing the same challenges as nearly every other business in terms of rising costs and supply chain problems which limit what she can do.

Didier Trinh, director of policy and political impact at the progressive small business trade group Main Street Alliance, said that even given some of the government measures such as the American Rescue Plan, many small businesses are still struggling financially.

“Despite the fact that small businesses have shown time and time again that they’re resilient and able to adapt to very fast-changing circumstances, they are nowhere near at the level of profitability that they were before the pandemic,” he said.

Leisure and hospitality led job gains in February, adding 179,000 for the month, but on Main Street employers remained challenged to find the workers they need.

Marie Raboin, the co-founder of cider company Brix Cider in Mount Horeb, Wisconsin, said that for her 20-person company, part of the challenge has been attracting people back into the restaurant and foodservice sector as opportunities in other industries have expanded.

“I think service industry workers were able to go and find 9-to-5 jobs that paid as good as they were making the service industry, and they got nights and weekends off, and benefits,” she said. “I don’t blame them, I don’t blame anyone for doing that and I get it.”

Raboin has raised wages and looked to offer other perks like free yoga classes at a local studio, but that has not resulted in an influx of new applicants. Recently, she said, she received one application for a job that was posted for three weeks.

“We’re finding turnover is costing us more money than if we were to just like suck it up and work a lot more hours,” she said. “We’re willing to be more patient than just kind of hiring to hire.”

Raboin said she expects hiring to be difficult for the foreseeable future, particularly in her industry, especially as larger companies in other industries offer more and more to potential workers.

“With the economy booming the way it was in various specific sectors, people were able to find better jobs,” she said. “My mom waitressed and my dad bartended, those were really good-paying jobs in the 80s and you could raise a family on that, but things haven’t improved for those people.

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