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Goldman Sachs: 83% of small businesses are struggling to fill jobs

Joe Wall, Goldman Sachs 10,000 Small Businesses Voice' National Director, joins Yahoo Finance to discuss his Goldman's latest research regarding the pressures small businesses are facing coming out of the pandemic.

Video Transcript

ADAM SHAPIRO: When we look at the state of small business, it is no secret that small business owners are dealing with so many different issues. You've got inflation. You've got the pandemic loss of business and then managing a workforce that may or may not want to get a vaccine, plus finding people to fill vacancies.

Let's talk about the latest survey from the 10,000 Small Business Voices. This is Goldman Sachs. And it's Joe Wall, Goldman Sachs national director of the 10,000 Small Business Voices, along with our correspondent, Dani Romero, to talk about this latest survey you all have done. Because the headline from this, only 38% of small business owners believe the US is heading in the right direction. JO, how do we define the right direction? Put this into context.

JOE WALL: Well, that's, as you're probably aware, that's a tried and true question that's asked in most national surveys that, you know, most major networks have done for the last 25, 30 years. So we just use it as a gauge to kind of gather sentiment about how small business owners feel things are going. So dating back to June, which we did our last survey, at that time, 67% of small business owners felt like things in the US were moving in the right direction. That number has now declined to 38%, so reflecting a 29% decline.

So I think that reflects the fact that you have the Delta variant, obviously, running high in terms of infection rates across the country. You have inflationary pressures that, you know, based on our data, have only intensified since June. And you have workforce challenges that continue to mount in terms of both hiring challenges and just also confronting a lot of issues that quite honestly don't get a lot of attention, like mental health issues that we see in our data.

DANI ROMERO: And Joe, to the point of inflation, you know, you guys found that 86% of small business owners say they are concerned about inflation. And I think we've kind of seen that across the board. What are the specific impacts these small businesses are facing in regards to inflation? And what sectors are specifically being the most impacted by this?

JOE WALL: So we asked a few inflation related questions. We have obviously asked, to your point, the 86% say they're concerned. 84% have increased their operating-- or-- excuse me-- reflects increased operating costs. We also found 81% saying that inflation has intensified for them since June. So that's kind of the picture of what we're seeing at a macro level. When you dive into the crosstabs and look by industry, you know, to be honest, it's pretty high across the board.

I would say, you know, the ones where we're seeing the highest rates of inflation are manufacturing, construction, food, hospitality, obviously, restaurants. Those tend to be a little bit higher, but the numbers are pretty sky high.

SEANA SMITH: Joe, when it comes to what needs to be done, especially on Capitol Hill at the federal level, I guess, what do policymakers need to focus on? And when we think about additional help, I guess, what does that need to look like?

JOE WALL: Yeah, so we-- you know, our survey, we discussed this last week when you were kind enough to have me on. You know, on access to capital, that's been, obviously, a consistent issue that has plagued small businesses throughout the pandemic. You know, our most recent data finds that only 31% of small businesses are very confident that they could access capital if they need to. Number drops to 20%, by the way, for Black business owners.

We were very excited to see last week that the SBA made some very material modifications to the COVID-19 EIDL loan program. This is a loan program that when it initially was introduced had $150,000 loan cap, has a 3.75% interest rate over 30 years, so it's a long-term low interest loan.

The Biden administration increased that loan limit all the way up to $2 million, and in addition to that, really added a lot more flexibility in terms of what you can use the loans for. So you can use it to consolidate your debt. You can pay forward debt. And most importantly for small business owners right now, they're having a very tough time accessing capital because of their 2020 financial statements and the fact that, obviously, the pandemic, for most of them, had very dire consequences in terms of their revenue.

So the upside of the COVID EIDL program is that it looks at your 2019 financials, instead of your 2020. So for a lot of businesses, this is going to give them an opportunity to access working capital in a quick fashion, which I think is going to have an incredibly positive impact to help small businesses recover. So that in the near term was a very positive development. We'll have to wait and see if more relief is necessary I think in the next four to six weeks, just depending on how the Delta variant winds its way through the United States as we head into the fall.

DANI ROMERO: And Joe, back to inflation, should small businesses worry about it? And are there ways that small businesses can stay ahead of the inflation game?

JOE WALL: Well, I mean, I think they-- yeah, they've been worried about it for not just recently, but I think over the last several months in terms of getting ahead of it, you know, I think the unpredictability right now of both the COVID variants, what's next after Delta, we, of course, don't know, but also, just the economic dynamics right now, we didn't get to it. But when we look at the hiring dynamics right now, the good news is that 73% of small businesses say they're hiring full-time or part-time employees. But 87% say they're having a really tough time filling those vacancies.

So the hiring dynamics-- and we saw this in June-- have only gotten tougher for small businesses, as they compete, by the way. You'll often hear them say this with larger operators who are able to offer richer benefits and higher wages in some instances. But that-- the hiring dynamics are, I think, almost unequal footing in terms of inflation, in terms of challenges they're facing right now.

ADAM SHAPIRO: Joe Wall is Goldman Sachs National Director of 10,000 Small Businesses and Voices. Thank you for joining us as well, Dani Romero, our correspondent. Thank you, too.