About 45 percent of small US companies freeze hiring amid rising inflation and labor costs

About 45 percent of small business owners in the United States are freezing hiring new workers due to rising labor costs and high inflation, according to Alignable’s July employment report.

A competitor survey found similar results, interviewing 4,739 small business owners, from late June through mid-July.

That’s even though 51 percent of small employers are still trying to find workers for important positions, but the shift in the work situation this summer has made things even more difficult.

The report, released on July 21, came after the latest US Bureau of Labor Statistics data showed consumer prices rose 9.1 percent last year, the highest level in more than 40 years. Meanwhile, the BLS producer price index rose nearly to an all-time high of 11.3 percent in the previous 12 months.

“This represents an important shift in employment, and is largely a response to rising labor costs, hyperinflation, fears of a recession, and higher interest rates,” Alignable said.

The survey found that 4 percent of small businesses were planning to lay off employees and that “some employers note that they have learned to live without additional employees, make other changes and/or work longer hours themselves.”

This includes 5 per cent of companies in the real estate and auto industry and 3 per cent in retail.

Too expensive to rent

Hiring freezes vary across industries and state to state, with 66 percent of gym owners, 63 percent of real estate companies, 38 percent of restaurants, 58 percent of carriers reporting, and 55 percent of businesses reporting a hiring freeze. The auto industry, 55 per cent of retailers all stopped.

Some states have more problems with hiring than others, while other small businesses are more selective in trying to hire the right people for the jobs, but the majority of business owners think hiring right now is too expensive.

Alignable reports that “the five states hardest hit by the employment slowdown are NJ (64%), FL (63%), TX (52%), VA (52%), and CA (49%). “3% to 14% of all small and medium business owners in these states say they will have to lay off employees as well.”

Five other states on the list are not far behind, with 48 percent of Pennsylvania, 47 percent of Ohio, 41 percent of New Yorker, 39 percent of Massachusetts, and 33 percent of SMEs in Coloradan that applies a hiring freeze.

Only 26 percent of all small businesses reported a full recovery to pre-pandemic revenue levels, while 60 percent said labor costs had increased.

About 18 percent of these employers admitted that wages are now 25 percent higher than they were before 2020.

Management without additional employees

Finally, some employers note that they have learned to live without additional employees, make other changes and/or work longer hours on their own.

The site admitted that other poll participants are beginning to take into account the possible negative effects of the looming recession.

The other survey reported that at least 48 percent of small business owners think we’re already in a recession, and another 32 percent expect a recession later this year.

The Alignable survey of 5,350 small business owners was conducted from May 10 to July 19.


Brian S. Jung is a New York City-based citizen with a background in politics and the legal industry. Graduated from Binghamton University.

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