Workforce Doubled... US Labor Shortage Spreads to SMEs

[Asia Economy Reporter Yujin Cho] According to a recent report by The Wall Street Journal (WSJ), small and medium-sized enterprises (SMEs) in the United States, which are accelerating the pace of economic reopening amid COVID-19, are struggling to recruit personnel.

Small businesses with around 20 employees plan to double their workforce over the next six months to a year, but they are facing difficulties securing staff due to a shortage of available workers.

As large U.S. corporations grappling with labor shortages are increasingly raising wages to fill their workforce, the recruitment difficulties for SMEs are intensifying.

WSJ pointed out that small businesses, which have limited buffer funds and lack the capacity to match the salaries and welfare benefits offered by large corporations, may find it even harder to cope with labor shortages.

According to a survey conducted by Vistage Worldwide, a U.S. SME CEO organization, more than two-thirds of respondent companies reported difficulties in finding qualified workers.

The response rate of companies expecting an increase in the number of employees over the next year reached 75%.

According to the ADP National Employment Report, employment in companies with fewer than 20 employees increased by 13.5% year-over-year last month, while companies with 20 to 49 employees saw a 15.9% increase. Large corporations with over 1,000 employees showed a 7.3% employment growth.

Mark Zandi, chief economist at Moody’s who authored the ADP report, said, "For small businesses, losing even one employee can make operations impossible," adding, "Small businesses suffer greater operational losses when positions remain unfilled due to labor shortages."

U.S. companies are increasing employment supported by COVID-19 vaccine distribution and rising demand, but unemployed individuals are delaying returning to work due to fears of virus infection, reduced childcare services, and generous unemployment benefits.

Photo by WSJ

Large U.S. retail and consumer goods companies accelerating the pace of economic reopening are competing to raise wages to fill necessary positions.

On the 19th (local time), U.S. sports brand Under Armour announced it would raise the hourly wage of about 8,000 part-time workers in the U.S. and Canada to $15 per hour.

As a result, some employees will see their wages increase by up to 50%. This is a desperate measure to strengthen online sales channels amid the growth of the non-face-to-face market due to COVID-19 and to remain competitive in attracting talent against other leading online companies.

McDonald’s announced plans to hire 10,000 new employees and to increase wages by an average of 10% for workers at company-operated stores, while Amazon, the world’s largest e-commerce company, plans to hire 75,000 new employees in the U.S., offering a high average hourly wage of $17 and a $1,000 bonus in some regions.

With concerns about inflation arising from rising raw material prices and recovery in consumer spending, wage increases for workers are also cited as a factor putting upward pressure on prices.

This content was produced with the assistance of AI translation services.