Overcoming The Labor ShortageSep 24, 2021 12:58PM ● By Pam Kessler
7.5 million Americans will lose their extended unemployment benefits in September. The question remains, what will this do to the labor shortage plaguing the majority of small businesses? Fortunately, we don't have to wait to find out. Twenty-two states have ended their employment benefits early, and the numbers are in.
Let's start with the bad news, in these twenty-two states, consumer spending dropped. This is bad for local businesses and couldn't come at a worse time. A new research paper from Harvard University found that these twenty-two states experienced an average of 20% decrease in week-over-week consumer spending, compared to states that kept benefits in place.
Eliminated Benefits means millions of Americans will finally be available to work. Right? You wouldn't be alone in this thought process. However, the data from this study shows only 4.4% more workers in the 22 states gained employment, compared to their colleagues in states that kept the benefits in place. For every eight workers that lost benefits in the early out states, only one went on to gain employment.
What does this mean for my business? Well, for starters, it means weathering the storm a little longer. Even though 7.5 million Americans will lose a significant portion of income this month, we shouldn't expect a flood of job applicants. Potential employees re-entering the workforce are demanding more than ever before, and small businesses are often unable to keep up. It also means being prepared to weather a potential decrease in income due to a decline in consumer spending, estimated at approximately 20%.
What can be done? Fortunately, Congress has released and/or renewed many programs to offset the catastrophic effects Covid-19 is having on small businesses.
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