Are Unemployment Benefits Making Hiring Impossible? 4 Tips to Attract Employees

If you’re a small business owner struggling to hire right now, you’re not alone. According to the National Federation of Independent Businesses’ March 2021 Jobs Report, 42% of small businesses surveyed can’t find the help they need. While it seems counterintuitive that hiring would be difficult with high unemployment, many believe it’s the unemployment insurance benefits themselves that are making it hard to hire.

Why it’s hard for small businesses to compete with unemployment benefits

President Joe Biden extended federal unemployment benefits through September 6, 2021 as part of additional coronavirus relief legislation under the American Rescue Plan Act. Recipients receive $300 per week of federal unemployment benefits, in addition to whatever state benefits they are eligible for. In some states and/or industries, individuals are able to receive more money through unemployment than their previous or potential employers are able to pay.

Restaurants, according to a slew of accounts on the internet, have been hit particularly hard. That’s because restaurants typically operate on very thin margins. To the calls of those urging restaurant owners to pay employers more in order to entice them back to work, that’s simply not an option for most.

“I am turning away 80% of potential customers due to lack of staff”

While these rates are competitive in our industry, they cannot compete with the enhanced unemployment benefits.”

But it’s not just restaurants. Small business owner John Manison of Sailfish Swim School in Los Angeles said his business has really struggled to find workers. “As a swim school, we generally only pay a few dollars more than the minimum wage in California. While these rates are competitive in our industry, they cannot compete with the enhanced unemployment benefits,” Mansion said.

He explained that in order for an employee to earn the same amount as they could through unemployment benefits — even when receiving California’s minimum weekly unemployment benefit of $110, plus the federal benefit of $300 — they’d have to work 23 hours per week.

If an individual receives the maximum California-state benefit of $410, they’d have to work 42 hours per week to earn the same. “There are not enough hours for me to give my employees 40 hours per week, and as the nature of a swim school is hiring college students as part-time employees,” he said. “It’s hard enough for me to give everyone 22 hours every week.”

Mansion said he understands why an individual might not be enticed to seek employment, and he doesn’t fault the unemployed. “Why would you work for someone, when at best you would make the same amount that you would make to stay at home?” he said. “I don’t blame the unemployed, but it is causing a severe strain on our business, as I am turning away about 80% of potential customers due to the lack of staff,” he added.

“Struggling to keep the lights on”

Dan Bailey, president of WikiLawn, runs an online landscaping resource that matches customers to local lawn care. He noted their partners have struggled to hire workers, and he also believes this is due to expanded unemployment benefits. “Lawn care wasn’t something that ever offered great pay despite the labor involved, and when the federal government increased unemployment insurance (as they should have), it created a situation where former employees were getting paid more while unemployed.”

When the federal government increased unemployment insurance (as they should have), it created a situation where former employees were getting paid more while unemployed.

Bailey said most people just advise businesses to pay more, but that’s uninformed. “This ignores the fact that many businesses — especially home businesses — are struggling just to keep the lights on,” Bailey said.

4 tips to attract employees

While you may not be able to compete with unemployment insurance benefits, there are ways you can work to appeal to qualified workers.

1. Get the word out

Make it clear to all that your business is hiring. If you have a storefront or physical location, post Now Hiring signs. Publicize your search for employees on traditional job sites like Glassdoor and Monster, but also consider Craigslist, neighborhood social media groups, and sharing to your professional social media accounts. You could even get creative: One chef had a taste of virality when he created a meme of himself in an empty kitchen with the caption, “When you’re hiring cooks but so is every restaurant.”

2. Highlight non-financial benefits

Now is the time to highlight the non-financial benefits available to employees of your business. Can you beef up PTO? Is it possible to offer on-site childcare, even a few days a week?

Chances are financial compensation isn’t the only benefit your business offers employees. Now is the time to highlight the non-financial benefits available to employees of your business. Can you beef up PTO? Is it possible to offer on-site childcare, even a few days a week? How about a commuting stipend? What do your retirement programs look like for employees? If you don’t yet have a 401(k) match program, now is a good time to consider investing in one to help you attract qualified workers.

3. Promote pathways to a career

As things currently stand, the additional federal unemployment insurance benefit expires on September 6, 2021. Continuing to collect unemployment is only a current fix to a fast-approaching need for employment. Promote the career opportunities and employee development programs at your company. One way to do this is by presenting career pathways while recruiting. Explain that yes, entry-level or starting employees are hired into X position, but with time, dedication, and skill acquisition, they could be promoted into Y position, and so on.

If you haven’t yet done this sort of career mapping for employees, or you’re unaccustomed to pitching candidates on their potential future at your business, now is the time to work on this. You’ll strengthen your ability to get candidates in the door today and tomorrow.

4. Pay more

The stark reality is that this just isn’t an option for many small business owners. But if it’s feasible for you and your business, paying employees more is a great way to counter the draw of unemployment benefits.

Get creative about what you can offer candidates

Small businesses have suffered disproportionately through the pandemic. It feels unfair that just when businesses are on the cusp of recovery, qualified workers are hard to find. Get creative about what you can offer candidates through employment with your businesses and spread the word that you’re hiring every way you can. Consider enhancing your non-financial benefits to entice employees and illustrate the opportunities of a long-term career with your business. It’s felt like an impossible year, but for the first time in a long time, the prospect of a post-pandemic life is on the horizon if businesses can hold on just a little longer.