A higher rate of small-to-midsize businesses (SMBs) are growing concerned over labor demand, potentially outpacing recession worries.
The Q2 2023 Main Street Index by financial, insurance and advisory services firm CBIZ found more business owners are growing worried they won’t be able to keep their full staff through the next quarter. Forty-eight percent of respondents listed employee retention as a top concern, up 25% from Q1, reported CBIZ.
This compared to 62% of respondents who reported fears over a recession and having enough skilled workers on staff (56%).
“The latest CBIZ Main Street Index shows the Fed’s actions, along with other factors, are starting to open more cracks in the foundation of the economy,” said Anna Rathbun, chief investment officer of CBIZ Investment Advisory Services, in a statement.
Despite the growing concern with employee retention, CBIZ found respondents were still fearful of a recession in the future. Fifty-one percent of businesses surveyed have a negative or neutral outlook on the economy, and more than seven in 10 expect a deteriorating economic downturn in the future.
“We’re going to be keeping a close eye on the small and midsize businesses that are poised to do well during the downturn. The coming months will test the durability and savviness of business owners, especially those in industries that are not recession-proof,” Rathbun later said in the statement.
Concerns over labor retention come as three-quarters of companies raised the prices of goods and services in the last quarter. According to CBIZ, over three in four businesses reported price increases by at least 1% over the past three months, up from 72% in Q1, and more than 55% of businesses said they have raised prices by 5% or more.
The increase in prices could be attributed to rising interest rates, as 27% of respondents connected higher rates to an overall impact to their business funding, up from 17% in the first quarter. Meanwhile, 64% of companies reported experiencing higher borrowing costs, untouched from the previous quarter, found CBIZ.
The index analyzed responses from 753 businesses with less than 100 employees in 31 industries across the U.S.
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Amanda Umpierrez is the Managing Editor of 401(k) Specialist magazine. She is a financial services reporter with over six years of experience and a passion for telling stories and reporting news. Amanda received her degree in journalism and government and politics at St. John’s University. She is originally from Queens, New York, but now resides in Denver, Colorado with her partner. In her free time, Amanda enjoys running, cooking, and watching the latest drama show.
