The tight labor market can be observed in various ways: through one's own observations, by reading the Labor Department's latest job survey and by listening to concerns of owners of small businesses.
Personal observation, such as in a visit to a fast-food outlet, might be most convincing. Remember when smart, eager young workers rushed to serve you? Service now isn't quite what it was. It's a real problem for the industry.The latest Labor Department job survey offers documentation of the tightening of the supply of workers. In February, civilian unemployment declined to 5.1 percent, a 14-year low, while employment rose by 290,000 jobs.
But even more significant is the breakdown. The jobless decline was almost solely among those ages 16 years to 24 years, in which skills are limited. And the job gains were in companies that produce services rather than goods.
Reflecting these trends are the concerns of small-business operators as indicated by responses from 1,600 businesses, most of whom employ fewer than nine workers, to a survey by National Small Business United.
Asked to name the three major problems facing their businesses, the survey respondents gave the following rankings:
1. Government regulations.
2. Labor quality, educational level of workers and job training.
3. Labor and payroll costs.
The first concern isn't surprising. Small businesses long have felt oppressed by the enormous number of government regulations that affect their businesses and add oppressive paperwork requirements.
The next two aren't especially surprising either; everyone knows small businesses constantly worry about labor costs and other labor issues, such as losing good workers after spending many dollars and months training them.
What is surprising is the position these labor issues occupy, outranking such concerns as federal taxes, competition, interest rates, capital costs and state and local taxes, all major worries for years.
And, while it isn't identified specifically as a labor issue, the fourth-ranked item reflects the tightening labor market. It is insurance costs - not just liability insurance, as in the past, but health insurance as well.
When it is tough to get good workers, as it is now, small businesses are forced to meet competition not just by raising wages but by offering other inducements, too, and one of the most effective is health insurance.
The survey found that one of the most significant differences from 1987 to 1988 was the rising level of benefits offered by small business. At the top was health insurance; 77 percent offered it in 1987, 91 percent in 1988.
Small businesses are especially sensitive to labor changes because it is their job to train entrants to the world of commercial work. And to a great extent, the smaller the business the greater the sensitivity and vulnerability.
Those responding to this survey generally were very small. More than 88 percent said they had fewer than 50 workers. The majority reported annual sales of less than $5 million and 25 percent had sales below $250,000.
All respondents are members of National Small Business United, which grew from a merger of the National Small Business Association and the Council of Smaller Enterprises, whose membership included regional advocacy groups.