Nationally Small Businesses Keep Hiring as Federal Reserve Tries to Slow Economy
As the Federal Reserve increases its effort to cool inflation and the economy, American small businesses have seen a surge in hiring. Since the onset of the Covid-19 pandemic, small companies (those with fewer than 250 employees) have been responsible for all the net job growth in the United States and currently account for nearly four out of five available job openings. Starting February 2020, these small establishments have hired over 3.6 million more people than have been laid off or who quit, while larger companies have cut a net 800,000 jobs during that same time.
Small businesses accounted for 78 percent of the U.S. job listings in November 2022, and 91 percent of the post pandemic increase in job openings. While many big companies have laid off workers and/or ordered hiring freezes in recent weeks, small businesses have continued to hire workers at a rapid rate, although many are unable to fill open positions.
However, central bankers have pointed to the labor market as a primary driver of high inflation. The Federal Reserve hiked interest rates seven times last year, bringing U.S. interest rates to their highest level since the global financial crisis, and has plans to continue to increase rates this year to slow the economy. These rate increases are making it harder for small businesses to find outside funding, including personal and small-business loans.
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