Report: Small business optimism on the rise, but Pennsylvania businesses still face labor shortage

• By Christen Smith | The Center Square

HARRISBURG, PA – Small business optimism rose again in April, according to a report from the National Federation of Independent Business, even as employers in Pennsylvania struggle to fill positions.

The optimism index gained 4.8 points over the last four months as the economy continues its pandemic recovery. NFIB said government policies, stimulus checks and business aid explain the recent “surge” in GDP growth and jobs recovered – a total of 12 million out of the 20 million lost, so far.

The NFIB said, however, the labor shortage undermines the ongoing recovery. It’s the number one issue facing small businesses, according to Pennsylvania State Director Greg Moreland.

“Pennsylvania small businesses are feeling the effects of the labor shortage in their daily operations,” he said. “Owners are competing with various factors to get workers in open positions and reach a full staff.”

Sign-on bonuses and higher wages have become commonplace as unemployment rolls continue to exceed pre-pandemic levels.

The reasons why many have not returned to work are varied and complex, the Department of Labor & Industry said. Some residents still aren’t fully vaccinated while others have children still receiving virtual instruction.

Some employers said they can’t compete with the $300 weekly boost to unemployment compensation. Rules that require residents to forfeit benefits if they turn down a job offer have gone unenforced, according to some business owners.

Lawmakers want to reinstate work search requirements as soon as June 8 in an effort boost workforce participation. The department said it’s still considering the right timeline as it focuses on launching a new unemployment compensation system in the coming weeks.

For now, 44% of small businesses surveyed by the NFIB in April said they had “record high” numbers of open positions. It’s a trend repeated across the country as national unemployment hovers around 6.1%.

State-level unemployment data for the month of April was not yet available as of Friday. The department reported a 7.3% unemployment rate in March, well above U.S. average.

Labor Secretary Jennifer Berrier told lawmakers earlier this year that Pennsylvania lost 500,000 jobs in 2020 that it may never recover.