Human Resources and Small Business & Startups

Small business short of skilled, educated workers

SBAM says shortage may become a drag on Michigan’s small business economy.

August 14, 2015
| By Pete Daly |
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More than two-thirds — 69 percent — of small business owners in a recent Small Business Association of Michigan survey said they are having difficulty filling open jobs due to a lack of qualified applicants.

“There are indications that this workforce issue is beginning to drag on the small business economy,” said Michael Rogers, vice president of communications for SBAM. “It’s tough to grow your business when you can’t get the workers you need.”

Rogers said SBAM hears from its members that the jobs that need filling are “anything involving IT, data management, biomedical … anything that requires a high level of skill and education — but also skilled trades, such as welders and CNC operators.”

Rogers said small businesses reportedly are having difficulty recruiting because of the competition from big companies.

“I think, in large part, with the recovery of the auto industry and other manufacturing around the state, big companies are competing hard for the pool of workers, and it’s tougher for small businesses,” he said, mainly because “they can’t compete on wages and benefits.”

Small businesses are forced to “try to be a little more creative in how they attract people,” he added.

So why are young people in Michigan not seeking out the training for the better-paying skilled jobs?

Rogers said there is greater demand for those who are ready for the skilled jobs, but the supply chain “takes a while to catch up” to the growing demand.

He believes in recent years skilled-trade careers have declined in status in the population, as many of the jobs held by previous generations of Americans left the country.

“If kids don’t start hearing until 8th or 9th grade in school that this is a viable career path, it’s going to take them a few years to get the training. Meanwhile, small businesses need people right now,” he said.

Rogers said small businesses appear to be responding to the skilled labor shortage by increasing wage rates. A recent SBAM survey indicated “a large percentage (of companies) are going to increase wages.”

Among small businesses, traditionally the profit structure just hasn’t been sufficient to offer higher wages. But recent SBAM surveys reveal small business profits are increasing, so some businesses are going to use part of that to increase wages for current employees “and also more lucrative offers for new employees,” according to Rogers.

There were 895 small business owners interviewed in late spring for this round of the SBAM Barometer survey, but it was not limited only to members of SBAM.

SBAM reports that one side effect of the tight labor market is only 4 percent of survey respondents said they expect to lay off workers, compared to 17 percent in November 2007 who said they were going to lay off workers.

In other survey results, over the previous six months:

  • Forty-nine percent of small business owners said sales had increased (the same level as six months ago).
  • Thirty-two percent said profits had increased (down from 35 percent).
  • Thirty percent said they hired more workers (up from 29 percent).

Looking forward over the next six months:

  • Sixty-one percent said they expect sales to increase.
  • Fifty-six percent said they expect profits to increase, up from 50 percent in the last survey.
  • Thirty-seven percent intend to hire more workers, up from 33 percent.

The Small Business Association of Michigan bills itself as the only statewide and state-based association that focuses solely on serving the needs of Michigan’s small business community. With headquarters in Lansing, it has been active statewide since 1969 and counts more than 23,000 members, ranging from accountants to appliance stores, manufacturers to medical, and restaurants to retailers.

The SBAM mission is to help Michigan small businesses succeed by promoting entrepreneurship, leveraging buying power and engaging in political advocacy.

The typical SBAM member company has about 10 to 12 employees, according to Rogers.

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