Why can’t small businesses find quality workers?
Moody’s Analytics chief markets economist John Lonski discusses why he thinks many small businesses cannot find employees and the pressure to raise wages.
Moody's Analytics chief markets economist John Lonski joined FOX Business' “Varney and Co.” to discuss a new survey from the National Federation of Independent Business showing that 40% of small business owners are having trouble filling open jobs.
GOLDMAN ECONOMISTS SEE UNEMPLOYMENT RATE FALLING TO 4.1% BY END OF 2021
JOHN LONSKI: “One of the first reasons would be that some people are unwilling to work because they're fearful of COVID-19 — they may get sick, their family may get sick. And of course, the other reason is the supplemental unemployment benefits may be having the effect of dissuading, discouraging people from taking a job. But I'm simply struck by the fact — here we are less than one year into an economic recovery and we have a record high percent of small businesses claiming that job positions are hard to fill. I mean, what's going to happen when the economy takes off?
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In the month of February [when the survey was conducted], the net percent of small businesses that increased wages was relatively high: 25 points. In the past, that would average something closer to 11 points. So we already see that small businesses are under pressure to hike wages and salaries in order to attract employees. And my guess is that pressure will only increase as the economy improves.
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If you strip out food and energy prices, consumer prices are up by an even smaller 1.3% annually. But you have to be concerned [about inflation]. It could be that late this year or 2022 these inflation pressures materialize. Once we reach that point, because of higher wages and salaries, consumers have an easier time absorbing price hikes. That's when you may get yourself into trouble with price inflation. That is precisely what happened in the 1970s.”
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