Coronavirus

Report: Small Businesses Struggle with Childcare, Employee Retention, Sealing Gov't Contracts

The former FBI agent and his co-conspirator allegedly made fake phone calls to a fake judge to further convince the defrauded woman was on "secret probation."
The former FBI agent and his co-conspirator allegedly made fake phone calls to a fake judge to further convince the defrauded woman was on "secret probation." Jericho / Wikimedia
A report released by Goldman Sachs calls on policymakers to address ways they can meet the needs of small businesses today. The report highlighted several problems holding small businesses back, including employee retention, child care, and a lack of access to government contracts.

Small businesses are struggling to compete with bigger businesses when it comes to hiring and retaining workers, according to the report.

Some 97% of small businesses seeking employees said hiring struggles were harming their bottom line. That’s a 17% increase since last year. Of those businesses having trouble finding employees, nearly three quarters said it was due to competition with larger employers that can offer better pay and benefits.

Once they have those employees, small businesses have trouble hanging on to them, according to the report. Employee retention was a problem for 75% of small business owners.

Brent Reaves co-owns Smokey John's Bar-B-Que & Home Cooking in Dallas with his brother. They've been operating since 1976. He said the last three years have been the most challenging. "We've had such a huge struggle with retention, which usually wasn't an issue for us," Reaves told the Observer. "There are a lot of other companies offering more. It's hard to compete with the big boys like FedEx and Amazon."

Sometimes, employee retention comes down to retirement plans, and 39% of small businesses said they couldn’t afford to provide them. About 41% of small business owners said they offer these retirement benefits. That drops to 23% among Black small business owners.

The report said existing policies and incentives for hiring and retention at small businesses aren’t widely adopted because “they are overly burdensome and complex, so they should be enhanced and revitalized.”

For example, a paid leave tax credit was offered through the Families First Coronavirus Response Act, but only 4% of employers claimed the benefits in 2020. By July 2021, only 3% of employers used the Employee Retention Credit, which is meant to help keep employees on the payroll.

"It's hard to compete with the big boys like FedEx and Amazon." - Brent Reaves, Smokey John's Bar-B-Que & Home Cooking

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A majority of the surveyed small businesses, 88%, said they wanted policymakers to address workforce and competitiveness challenges they’re experiencing.

The report said employee retention programs should be revised and new ones should be created. These revisions could include increasing awareness, making the claiming process simpler, and more prompt payments to small businesses. The Small Business Administration should also help increase awareness of paid leave options for small businesses. It should also be made easier for small business owners to obtain retirement plans for their employees.

Small businesses also need access to more capital. The report said there are gaps in credit markets, especially for Black-owned small businesses. Nearly half of the surveyed Black small business owners said they expected to take out a loan or line of credit for their business in 2022. But, only 19% said they were “very confident” they could get their hands on the funds.

The COVID-19 Economic Injury Disaster Loan program should be renewed, the report said. Before it expired at the end of last year, the program provided small businesses struggling from the pandemic access to more capital.

Policymakers should also beef up technical assistance and training that’s intended to help small businesses become “credit ready.”

The loan application process should also be streamlined and clarified, the report said. A program called the Community Advantage program helps increase access to capital for Black and Hispanic small business owners and others seeking small amounts of money. That program should be extended, the report said. Policymakers should even consider making it permanent.

Reaves said it's hard for a lot of restaurants to get capital because the industry is so shaky. He's been lucky to not experience that, but some of his peers have, especially restaurant owners who are people of color.

According to the report, child care is one of the most significant challenges highlighted by the pandemic. In the U.S., 95% of child care providers are small business owners.

More than half of small business owners, 55%, said they or their employees struggled with child care during the pandemic. Existing programs aimed to help small business owners provide employees with child care options see low adoption, the report said.

About 80% of the surveyed business owners said they supported Congress taking steps to increase access to affordable childcare.

The report said policymakers should incentivize and support small businesses pooling together to contract with childcare providers, which could make access cheaper.

They could also enhance exiting tax credits for small businesses to access and sponsor child care. Or, policymakers could try to create a new tax credit for child care providers. These could offer extended or more flexible hours that could better suit the needs of small business owners.

Lastly, there are too many barriers for smaller businesses looking to seal government contracts. Between 2010 and 2019, the number of small businesses providing services and products for the federal government shrank by about 38%, according to the report.

A federal contracting goal for women-owned small businesses has only been met twice since it was established in 1994. A majority of the surveyed businesses said policymakers should work to remove these barriers. One way to do that, the report said, is to expand training for small business owners to make sure they know how to apply for these contracts. 
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Jacob Vaughn, a former Brookhaven College journalism student, has written for the Observer since 2018, first as clubs editor. More recently, he's been in the news section as a staff writer covering City Hall, the Dallas Police Department and whatever else editors throw his way.
Contact: Jacob Vaughn

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