Taking the Pulse of America’s Small Business Sector: April 2022
By Daniel Newman
Across the United States, more than 32.5 million small businesses employ nearly 47 percent of the country’s workforce. The Census Bureau’s latest Small Business Pulse Survey provides timely insight into the condition of the country’s small business sector as economic conditions continue to evolve through the on-going COVID-19 pandemic. Here are four things we learned about this vital segment of the economy in mid-April.
- Achieving a pre-pandemic normal level of operations continues to elude a majority of small businesses.
Small businesses are increasingly falling into two camps when it comes to how the pandemic has affected their operations: those that have returned to normal and those that say they never will. Thirteen percent of small firms believe operations will never return to normal—a series high—while those reporting they are operating normally stood at 23 percent, just short of the all-time high reached the prior week. A further one-third of businesses believe that normal operations will only arrive more than six months from now.
- Delays and difficulties have increased across the board compared to last year, despite declining Covid cases and the end of many pandemic-related restrictions. The manufacturing and accommodation/food services industries continue to be the hardest hit by delays and difficulties related to worker availability and supply chain issues.Securing the two essential ingredients for small business success—workers and supplies—remains a challenge for a significant share of small businesses. As a result, firms are experiencing an increase in delays and difficulties across the board in obtaining materials and maintaining production relative to a year ago. Domestic supplier delays continued to affect almost half (nearly 45 percent) of small businesses last week, a share that is largely unchanged over the past two months. Despite growing port delays out of China, the share of firms reporting foreign supplier delays has held steady around 19 percent over that time as well.At the same time, just over one-third of small businesses have had difficulties hiring new paid employees. The manufacturing, other services, and accommodation/food services sectors are facing well above-average difficulty in both obtaining supplies and workers.
- The vast majority of small businesses nationwide report moderate to large increases in prices paid, with inflation’s bite felt most acutely across the Midwest.
Business operations across the country have been hampered by inflation in recent months, yet some states have been relatively more exposed than others. In Wisconsin, 86 percent of small businesses on average over the past three weeks reported moderate or large price increases compared to six months ago—the highest share in the country. In the District of Columbia, by contrast, that share stood more than 20 percentage points lower at 65 percent, likely due to the varying mix of industries present in those two locations. While small businesses in many Midwestern states appear to be feeling the brunt of inflation’s impact, coastal states including Delaware, California, Hawaii, Maryland, and Virginia all have relatively lower shares of firms dealing with hefty price increases. One-fifth of businesses report being fortunate enough to experience little or no increases in prices paid.
- Rural Western States are leading in a potential return to business travel.
Thirty-six percent of small businesses expect to have a work-related travel expense in the next six months—up several percentage points from the level in mid-February—and just shy of the survey question’s highpoint back in mid-July of last year. Even so, a hefty segment (32 percent) still does not anticipate having to budget for such an expense in the near future. In general, around three in 10 small businesses nationwide indicated that they typically never have business travel expenditures.The growing expectation for future work travel, whether out of necessity or desire, is partially tied to geographic location, as businesses in the Western half of the country led the pack. Based on a three-week average, Alaska (47 percent) took pole position in signaling a need to spend on travel-related expenses followed closely by a trio of states in the Mountain West: Montana (46 percent), Utah (45 percent), and Idaho (44 percent).Washington, DC, also makes a notable appearance in the top five, coming in with the third-highest percentage of businesses (45 percent) expecting to have travel expenses in coming months. This contrasts with some other major economic hubs in the Northeast, such as Massachusetts, where only 28 percent have similar expectations, and New York at 31 percent.