How the national worker shortage is affecting small businesses?

Posted at 6:57 AM, Jul 12, 2021
and last updated 2021-07-12 06:57:26-04

DETROIT, Mich. — It's been three weeks since our state's remaining COVID-related restrictions lifted, so we're exploring the hit small businesses have taken during the pandemic, what recovery is looking like now, and the road ahead.

First, we explore the ongoing worker shortage and its impact on local small businesses.

“If you look at the industries that were most restricted for the longest period of time by the rules, they were industries that are dominated by small businesses," said former Michigan lieutenant governor and current president of the Small Business Association of Michigan, Brian Calley.

"And so what happened was, their employees over the course of the last 16 months just had to find other things to do for a living.”

According to data published on Track the Recovery, since January of 2020, the number of small businesses open statewide declined by more than 50 percent as of June 21, 2021, one day before the bulk of Michigan's remaining COVID-related restrictions were lifted.

RELATED: Michigan officially lifts all restrictions for masks, gatherings & capacity on Tuesday

The industries Calley said fared the worst and likely impacted small businesses the most are industries associated with entertainment, conventions, large gatherings, or dining experiences tied to the ambiance and not necessarily geared for take-out.

It's not surprising that businesses in the leisure and hospitality sector have taken the biggest hit here in Michigan, the number of those open down 66 percent since the start of the pandemic.

Professional and businesses services in Michigan faring slightly better, down 38 percent according to the data.

Small business advocate and a small business owner herself, Jennyfer Crawford, is one of those in that sector still open. You likely know her from Ask Jennyfer or All Things Detroit.

"I create platforms for small businesses. And one of the main aspects of my business is creating these markets, these events, putting small businesses in front of thousands of customers," Crawford explained.

When large gatherings were banned due to COVID, she had to pivot fast, not only for her business but for her client's businesses as well.

“So what we started to do is we started to ship packages for the small businesses and now we’ve turned our business into a full down shipping and fulfillment center," she said. “I had never done that before, not in a large capacity.”

Sadly, a handful for Crawford's small business entrepreneurs in metro Detroit closed their doors, some for personal reasons like wanting to spend more time with family, and others simply out of financial necessity.

“That was one thing that happened during the pandemic that we saw a lot of too with businesses where the rents are going up," she said.

Crawford guesses about half of those clients who closed will eventually re-open.

Calley noted that the pandemic's economic impact on small businesses was deeply driven by the sector.

“Some have recovered quite nicely and even found additional opportunity," he said. "But the nature of the pandemic really did hit some businesses so hard that even 16 months into it they really are just getting to a point where they can begin the process of building their business back.”

Compared to neighboring states, Michigan has seen more small business closures since the start of the pandemic. In Ohio, the number of small businesses open now compared to January 2020 is down 38.6 percent. It's down 38.9 percent in Indiana and 45.8 percent in Illinois.