Inflation and Unemployment Rates—What to Do as a Business Owner. 

The subject of the economy has been an increasingly discussed topic for quite a while now. The word inflation has even come into play more often. However, people have been more focused on symptoms rather than the root cause.

In the past, we have faced issues with unemployment rates, which isn't anything new. We’ve been seeing trends that have helped to cause the inflationary problems we're experiencing today.

Let's see what’s happening, why, and what business owners should do in response.

Increased Salaries for Entry-Level Positions

During Covid, we experienced a labor shortage. As a result, if you don't have enough employees who want to enter the workforce, you need to find ways to attract them. This usually entails overpaying your employees.

Entry-level positions have higher salary requirements than ever before. The Wall Street Journal even says people who change jobs can make 15% more than if they stayed in their current one. With pay increases, the cost of living has skyrocketed, too. It’s a recipe for increased rates of inflation.

Premature Retirement is Leading to a Swarm of Workforce Re-Entry

An important event that we need to understand is the result of people retiring too soon. Many people retired early and thought they were set with their stock market gains. Then, the market corrected and triggered an “Oh, sh*t!” reaction. 

 With around 20% in market declines, people realized it was time to return to work. As a result, a significant bottleneck is put on the job market when skilled professionals suddenly reenter the workforce in droves.

What to Do as a Business Owner

As business owners, it can be easy to spend a lot of time worrying about the job market. Amidst all the worry, there's one piece of advice that will guide us through the storm and help us come out on top - you need willing and motivated talent. 

Higher salaries are being offered to satisfy the need for positions, but a filled position isn’t enough. Business owners need to stick it out and find workers who provide good results. It may take a little longer than you’d like, but it will be worth it in the end. 

When people are faced with a lack of jobs and workers, they tend to find other ways to survive. Many people have gone back to working second full-time jobs to keep up with the cost of living. Sure, this may seem like it's efficient, but there is a downside: our productivity as a whole decrease when we're dividing our time between two projects.

Final Thoughts

A higher number of employees usually equates to a higher productivity output. But that outcome can vary depending on each individual's level of production. We need to focus less on the numbers and more on the quality that each individual can produce. 

Hiring the best people for the job and training them to perform well is the key keep up the momentum.