- Two-thirds of respondents in National Federation of Independent Business survey say they are experiencing a negative impact as a result of the latest surge in COVID-19 infections
- The data showed that small business owners are seeing some easing in supply chain pressures, but that labor shortages are more persistent
- Respondents were taking steps such as raising wages, working more hours themselves, and offering more hours to existing employees to address staffing shortfalls
Summary by Dirk Langeveld
The COVID-19 pandemic has continued to create challenges for small business owners nearly two years after it began, according to a poll from the National Federation of Independent Business.
The survey, the 21st in a series of polls NFIB has issued since March 2020, collected 710 responses between Dec. 30 and Jan. 4. This period captured the spread of the COVID-19 Omicron variant, which has driven a major surge in infections.
Two-thirds of respondents said they are experiencing a negative impact due to this increase in COVID-19 cases. However, about half of these respondents said the impact was mild, with 23 percent reporting a moderate negative impact and 11 percent reporting a significant negative impact.
“The COVID-19 pandemic, exacerbated by the recent surge in COVID cases, continues to disrupt small business operations and sales,” said Holly Wade, executive director of NFIB’s Research Center. “Staffing shortages and supply chain disruptions also haven’t eased for small businesses despite owners attempts to raise compensation and adjust business operations to accommodate.”
Thirty-four percent said the increase in COVID-19 cases was having a mild effect on their employee attendance, with 23 percent saying the effect was moderate and 19 percent saying it was significant. There was a similar breakdown in the share of small business owners saying COVID-19 was continuing to impact their sales, with 34 percent saying the effect was mild, 26 percent saying it was moderate, and 10 percent saying it was significant.
Supply chain issues were affecting almost all businesses, with just 8 percent saying they were not experiencing any disruptions due to this issue. Forty-seven percent said supply chain challenges were having a significant effect on their business.
Eighty-seven percent said they expect supply chain disruptions to last for at least another five months. However, the survey also suggests that this problem may be easing. Forty-four percent said supply chain disruptions are worse than they were three months earlier, down from 62 percent in an October survey.
Labor shortages were proving more persistent, with 45 percent saying they considered this problem to be as pressing as it was three months ago. Twenty-three percent said they were experiencing a significant labor shortage, with 20 percent experiencing a moderate labor shortage.
Among those short on staff, the vast majority (83 percent) said they had responded by increasing their wages. This strategy far outpaced other efforts such as offering or enhancing health insurance benefits (29 percent), boosting their time off (24 percent), offering or enhancing referral bonuses (24 percent), and offering or enhancing hiring bonuses.
In changes to business operations, 88 percent said the owners were working more hours while 61 percent were offering overtime pay to their full-time employees. Forty-three percent said they were offering more hours to their part-time workers.
Sixty-four percent said they have increased their sales prices due to higher labor or supply costs. Of these owners, 41 percent said they have raised their prices by at least 10 percent, while 29 percent raised them by 5 to 9.9 percent.
Thirty-six percent said their sales are exceeding those they had before the pandemic, up 10 points since September. Another 32 percent have reached at least three-quarters of their pre-pandemic sales.
Only 21 percent said they think their local economy has recovered to pre-pandemic levels. Thirty-nine percent said they think the economic recovery will stretch into 2023 or beyond, while 27 percent said they think it will take until the second half of 2022 and 13 percent said they expect full recovery in the first half of this year.