More than 6 in 10 small businesses are not hiring because they cannot take on the additional costs, according to a new survey.
Alignable, a network for small businesses, said 63% of surveyed businesses are unwilling to hire and 10% of that share is laying off people.
The share of businesses unwilling to hire is up 18 percentage points from July, when it stood at 45%, while the percentage reducing staff is up 6 percentage points from 4%.
Alignable dubbed it a “quite significant” change that is also impacting Canada, where 59% of businesses say they cannot hire and 4% are doing layoffs.
“The overall situation is better in Canada than in the US this month, but not by much — and those figures are still quite high,” the survey report said. “Reasons for the drop in hiring among small business owners in both the US and Canada revolve around cumulative inflation struggles, including astronomical labor costs, increasing rent and higher-than-usual supply and energy expenses.”
Other factors include lengthy searches for labor that produce few hires, high turnover rates, a reduction in business locations and a decrease in consumer spending.
Only 23% of surveyed businesses said they have fully recovered from the COVID-19 crisis and more than half (58%) said labor costs are at least 50% higher than they were before the pandemic.
“While some small business owners admit they just gave up on hiring more staff, the majority note that it’s just too expensive to do it in this economic environment,” the survey report said.