Small businesses get some relief from hiring woes

Some entrepreneurs say that steps like increasing pay, adding internship programs and rewriting job ads are starting to pay off. Others report an increase in applicants as competitors cut back on hiring or begin layoffs.

UnaliWear Inc., a maker of medical-alarm watches, has struggled to keep new employees on the job this winter. “We were missed,” said Jean-Anne Booth, CEO of the 17-employee company. “They would accept the job, come one week and never be seen again.”

This fall, the Austin, Texas, company raised starting pay from $15 an hour to $18 an hour, and added $1 hourly increments six months later, to bring pay in line with other local employers. “Right now, we’re fully staffed for the first time in a while,” Ms. Booth said.

In a December survey, nearly 25% of more than 650 employers said it was easier to fill job vacancies than at the start of 2022 — up from 18% in November. Meanwhile, 20% of vacancies were difficult to fill, down from 25% in November. The survey was conducted for the Journal by Vistage Worldwide Inc., a business-coaching and peer-consulting firm.

The shift is modest and comes as unfilled job vacancies continue to weigh on many small businesses. 56% of those surveyed said that recruiting challenges make it difficult for them to perform to their full potential. Eighty-four percent of small business owners said they have increased wages in response to labor market challenges, and more than two-thirds have offered flexible hours and schedules.

In some sectors, economic pressures are creating opportunities to increase talent. Signature Transport Inc., two trucking companies based in Kelso, Wash. and Interstate Wood Products Inc. “We’ve seen it a little bit easier, mainly because some of our competitors are downsizing,” owner Dale Lemons said. About 125 employees. “This is not a very hot job market.”

Over the past 18 months, Mr. Lemmons has seen raises of 20% for entry-level truck drivers and up to 40% for those with at least three years of experience. About 25 people have gone through the paid internship program that started in January Seven are currently in training.

Chip Ridge, president of Millennium Title in Louisville, Ky., said he expects to see systematic hiring in early 2023 as the housing and mortgage lending industries continue to contract in response to higher interest rates and sluggish sales.

“There’s a lot of pretty high talent in our industry that’s being displaced as part of this economic shift,” said Mr Ridge, who has 33 employees. “We have an opportunity to get really experienced talent that we wouldn’t be able to find in the traditional market.”

By Water Tech Corp. An advertisement for a logistics position in East Brunswick, NJ, drew three applicants at the beginning of the year and then approximately 100 applicants this summer. “There were definitely a lot of candidates, but we’re still not seeing the right candidates,” said Guy Ehrlich, owner of the company, which has about 40 employees and sells battery-operated vacuums for cleaning swimming pools.

Mr. Ehrlich believes the jump in applicants reflects a hiring freeze at big companies. He expects the pool of more qualified candidates to increase in the coming months as large companies that expanded logistics operations due to supply chain shortages are now pulling back because they have too much inventory.

For other small businesses, hiring is harder than ever. Staffing shortages have resulted in Dotsch Local Services in Warren, Mich., frequently sending out three-person crews instead of four. The company, which is based on the cleaning of underground drainage systems, has 50 employees and 20 vacancies.

“We ask people to do with less,” said Joe Schotthofer, vice president of operations and the fifth generation of his family to work in the 124-year-old business.

Deutsche has increased starting pay by about 30 percent over the past 18 months and has increased its schedule to earn raises. He spends a lot of time talking to job candidates about company benefits and growth prospects.

More applicants are responding to job postings, “but we’re still not getting them into the interview,” Mr. Schotthofer said. New, unqualified candidates are coming in expecting to be paid the same as workers with 10 or more years of experience, he added.

Competition from larger companies with richer pay and benefits remains a challenge. D2 Solutions, a strategic consulting and technology firm focused on the hospitals and life sciences industry, recently lost a senior sales executive to a pharmaceutical company offering a 40% raise. “It was more than we could afford as a small company,” said CEO Dean Ehrhardt.

Overall, small business confidence improved the most in the 21 months to December, according to the Vistage survey, the largest monthly gain in the National Economic Review.

As the price of goods, services and other inputs continues to rise, higher small business confidence points to easing inflation, said University of Michigan economist Richard Curtin, who analyzed the data. In nine months, the net employment plans were very broad, he added.

Steven Sming, owner of restaurants in the Nashville, Tenn., area, Mere Bulls and Green Hills Grill, said more people are eating out more often. This Thanksgiving, for the first time in a decade, he didn’t have to call his four sons, ages 14 to 24, to fill a holiday manpower shortage. As of December 2020, hourly wages are up nearly 21%, he said.

“For the first time in a long time, I don’t even need managers,” said Mr. Smying, who has about 160 employees. “All of a sudden I had a lot of staff. It seems like we’re starting to get a little traction.”

Write to Ruth Simon at Ruth.Simon@wsj.com