Around 410,000 small business jobs need to be created by the end of this year to return to the pre-pandemic jobs trajectory, according to new data by Xero, shared with City A.M. this evening.

With small businesses employing over half of the UK workforce, a strong sector recovery will be needed to achieve significant employment growth.

The firm found that UK small business job losses have been almost doubling those in big businesses since the start of the pandemic.

Jobs were down by 24.4 percent year on year since May 2020, while jobs in February of this year remained 10.6 percent below February 2020 levels. 

Women, employees aged 30 and under, and those in customer-centric jobs, such as hospitality, experienced particularly sharp declines in employment in the small business sector during the early months of the crisis, with growth continuing to lag into 2021. 

However, the report also found that digitally connected small businesses faced far fewer declines in jobs (14.8 per cent) than those with less connectivity (18.4 per cent).

Small businesses that paid higher wages in each industry also saw fewer job losses. In May 2020, higher-paying companies saw small business jobs down 13.5 percent compared to lower-paying companies with jobs down 22.3 percent.

State of small business 

Xero came to its findings by using anonymized and aggregated data of hundreds of thousands of customer records, in partnership with Accenture.

Based on data on sales, jobs, time to be paid, and wages, the firm found that trading conditions are still difficult for many. In March of this year, overall small business performance remains below-average conditions in the UK. 

“We can see first-hand what’s happening to small businesses and the impact on the whole economy and jobs. One thing we’ve noticed is that small businesses are so often overlooked by the Government. And this imbalance needs to be addressed. Only then will we see positive change,” said Gary Turner, managing director of Xero UK.

“Employers can’t find the workers they need!!!!!” is one of the hot media trends of the last couple of weeks, and it continues to be a load of nonsense blaming workers for the actions of employers. Let’s get it right up front: Questions to ask when you read one of these articles include, “How much pay are they offering?” and, “Have they tried raising the pay they are offering?” and, “During the pandemic, has this employer made workers feel unsafe?” and, “Does the data support these anecdotal accounts in suggesting there is a labor shortage?”

The most frequent scapegoat in coverage of the supposed labor shortage is the $300 a week in added pandemic unemployment benefits—Montana Gov. Greg Gianforte just announced he was cutting off the additional benefit to force people back to the workplace, and Arizona Gov. Doug Ducey is requiring proof that people on unemployment are actively looking for work. Local news coverage filled with whining business owners continues to roll out steadily as well. But blaming the young people for not wanting [fill in the blank] kind of jobs is also a thing, as a recent CNN Business story on the hiring woes of manufacturers shows.

We have a perception problem. People don't know the jobs are here or that these are jobs they want,” the executive director of The Manufacturing Institute said. Entry-level jobs that “pay well above the federal minimum wage of $7.25 an hour” are going unfilled, CNN Business reports, in part because of competition from warehouses and distribution centers—except that since Amazon warehouse workers get $15 an hour for physically brutal labor, that gives us a ceiling on how “well above” the minimum wage these manufacturing jobs are paying.

Restaurant employers feature heavily in the “people are staying home because unemployment benefits are too high” genre of coverage, but a recent story by Nate Doughty of the Pittsburgh Business Times is an important entry in that genre. After Klavon’s, a local ice cream parlor, announced a raise from $7.25 to $15 an hour for new jobs, “It was instant, overnight. We got thousands of applications that poured in,” the manager said. “It was very overwhelming, very. People were coming in by the next day that it broke on the news, they were coming in, filling out paper applications. I was doing on-the-spot interviews.”

It took just a few days to fully staff the business for the summer. Klavon’s isn’t alone. The owner of The G.O.A.T. Sports Bar raised wages for front-of-house workers to a guaranteed $20 an hour—if they don’t make at least that much in tips, the business will bring them up to that level—and $18 an hour and a $500 bonus after 30 days of employment to back-of-house workers, up from an original offer of $15 an hour that didn’t draw enough applicants. And it’s not just paid, either.

Really, we had to offer more than the rest,” said Josh Wyka, the sports bar’s owner. “The people who are looking to work, they were all looking for full-time hours and not everyone is able to offer that right now, so I've been able to be fortunate enough to snag some of those and be able to offer full-time hours upfront, to begin with.”

Doughty also reports on a lumber yard that attracted applicants by stressing not just pay but job security and possibilities for internal advancement, and an amusement park that was able to add a sixth weekly day of operation after raising its advertised pay rates by $4 to $5 an hour.

Holy crap, what do you know, just in the Pittsburgh area alone there are all these businesses that got plenty of applicants! Someone tell the 84% of Pennsylvania restaurant operators who an industry group says are having trouble finding enough workers.

Then there’s the really big picture, which the Economic Policy Institute’s Heidi Shierholz takes on in this important Twitter thread, noting that “there is *always* a chorus of employers who claim they can’t find the employees they need. One reason for that is that in a system as large and complex as the U.S. labor market there will always be pockets of bona fide labor shortages at any given time.” But, she continues, it’s more common that the problem is employers not offering high enough wages. 

”The footprint of a bona fide labor shortage is *rising wages*. Employers who truly face shortages of workers will respond by bidding up wages to attract those workers, and employers whose workers are being poached will raise wages to retain their workers, and so on,” Shierholz writes. “When you don’t see wages growing to reflect that dynamic, you can be fairly certain that labor shortages, though possibly happening in some places, are not a driving feature of the labor market. And right now, wages are not growing at a rapid pace.”

It’s for that reason, Shierholz points out, that Federal Reserve Chair Jerome Powell said there’s not a labor shortage, because, “We don’t see wages moving up yet. And presumably, we would see that in a really tight labor market.” And Shierholz’s EPI colleague Josh Bivens jumped in with the observation that average hours worked per week in foodservice has gone down in recent months—so restaurant employers aren’t even giving their existing workers extra hours. 

There’s no labor shortage. Unfortunately, there’s also no shortage of business owners whining about how too-high unemployment benefits are letting lazy bums stay on the couch rather than getting to work and no shortage of credulous reporters willing to write those stories.