Businesses Are Understaffed, and Employees Are Overworked

Key Takeaways

• 40% of all business leaders surveyed reported finding it difficult to hire new employees.
• On average, employees at understaffed companies worked an extra seven hours per week.
• Business leaders reported an average monthly cost of $6,268 due to issues caused by being understaffed.

Have you noticed any changes in your local stores since 2020? Maybe there is one less register open at the supermarket or one less helping hand at a local retailer; perhaps you’ve even been waiting for a product to come back in stock without any updates from the manufacturer. These are just a few of the many effects a labor shortage can have. As well as impacting the economy, labor shortages also affect the very lifeblood of the workforce, the American worker. Over the summer of 2021, just under half of American business owners reported having open positions they could not fill.

We surveyed over 1,100 business professionals who have experienced a staffing shortage this year to find out what some of the difficulties of the current hiring climate are and what the experience of working short-handed amid a global pandemic has been like. Read on to find out what we discovered.

Challenges for Business Leaders

Businesses all over the country are looking to fill roles and are doing so in a variety of ways. Despite many companies having in-house hiring specialists and departments dedicated to hiring and retaining top talent, 40% of business leaders are having a tough time getting the talent they need in the door. Out of the companies we surveyed, 18% reported having positions open for over six months.

While many companies are going the traditional route of job postings, referrals, networking with former employees, or even outsourcing to a recruiting agency, 18% of companies are simply having to lower the qualifications bar in order to fill roles. A March survey from the National Federation of Independent Business (NFIB) revealed that 42% of companies surveyed had jobs they could not fill. Of these, 91% reported few or no qualified applicants. Is there a light at the end of the tunnel? Many Americans received some form of unemployment benefit during the pandemic, and 70% of business leaders believed staffing woes might subside when the benefits conclude.

State-Level Hiring Pains

One thing has become clear over the course of the pandemic: COVID-19 has not affected every state equally. While industries in every state faced their fair share of difficulties, recovery rates and the extent of ongoing hiring challenges vary across the country.

Nationally, 37% of small-business owners reported finding it difficult to fill jobs. That number jumped in New Hampshire where 46% of small-business owners reported the same, a worse number than in September, according to the United States Census Bureau’s Small Business Pulse Survey. On the other hand, around 24 states saw conditions improve from August, among those included New Mexico, which had the most-improved hiring conditions among small businesses.

Working With Insufficient Help

While management may be having a tough time in this economic climate, workers further down the company carry a heavy burden as well. Businesses trying to remain profitable and competitive have to walk a fine line so as not to push the employees they already have on staff too hard, especially since our respondents named burnout as the single biggest staffing-related issue. After all, if there’s a labor shortage, there are other jobs available to these workers, making these conditions even more complex to navigate.

According to our research, staff burnout happens more quickly at larger companies, but the effects of burnout lead employees to exit small companies at a higher rate. It’s difficult to blame anyone for burning out if they are expected to work an extra seven hours a week as reported by our respondents.

Low Payroll, Low Profits

Companies may not be saving or holding on to any extra profit by not spending as much on wages. In fact, understaffing can cost businesses money in all sorts of areas. These costs manifest themselves in obvious ways, such as missing out on potential work due to labor shortages or having to close up shop for a day. It also costs business owners time, effort, and resources they could otherwise be using elsewhere. This disproportionately affects small businesses, according to our data. It’s become a huge problem in the restaurant industry as well, causing countless closures across the nation.

The workers are feeling it as well, with 63% of small-business workers considering quitting over understaffed conditions. The numbers get a little less severe at larger companies, but what seems to be clear about the current workforce climate is that it’s unstable long-term. Over half of all employees we surveyed work under conditions that make them want to quit.

Back to Work During COVID-19

The word “re-opening” has been a hot-button term throughout the pandemic. Many companies that were not essential nor able to run from home were forced to close their doors at certain times during the last two years. Companies have also been struggling to open due to staffing problems, from hiring people in the first place to getting existing employees to show up for work. Over half our respondents reported having workers who were unwilling to come into work during the pandemic or who contracted COVID-19 and were therefore unable to come into work.

With COVID-19 continuing to cause uncertainty in the workplace and vaccine mandates looming across the country, some workers are walking away from their job entirely. Perhaps with the long-term health of the workforce in mind, vaccine requirements were viewed by our respondents as a positive strategy for alleviating staffing issues.

Staffing Uncertainties

The current job market is presenting a brand new set of challenges for most businesses. Companies are being forced to get creative to bring in top talent, and some are even lowering the bar just to fill a seat. The American worker is tasked with not only showing up during a pandemic and getting the job done but picking up the slack of unfilled positions as well. Companies must attempt to win back their overtaxed workforce while also covering the additional costs of recruiting, hiring, training, and even bringing on temporary workers to keep their doors open.

If your business is struggling and needs help bridging the gap from month to month or securing the funds to hire much-needed temp workers, Clarify Capital has you covered. Whether you need the financing to expand your team or to increase incentives to attract the new team member of your dreams, Clarify is here to help. Visit Clarify Capital today to learn more about quick business loan options for your business.

Methodology and Limitations

We surveyed 1,123 business professionals from employees to senior managers, executives, and business owners. We qualified only those who reported working in understaffed conditions in the past year. Respondents ranged in age from 21 to 76, and the mean age was 37 with a standard deviation of 10 years. 43% of our respondents identified as women, and 57% identified as men.

This survey’s data rely on self-reporting, which is liable to certain limitations such as telescoping, exaggeration, and selective memory. We did not weight our data or statistically test our hypotheses. This is a purely exploratory study of how business leaders are handling staffing.

Fair Use Statement

Do you know someone working overtime and want to share these results with them? We encourage you to send them this information as long as you use it for noncommercial purposes only and link back our original study.