As Economy Expands, Labor Market Tightens

The results of the May WSJ/Vistage Small Business CEO Survey revealed continued optimism, despite the belief that economic growth overall will remain modest through year-end. This sentiment is fueled largely by the positive outlook CEOs and small business owners have for their own businesses. What’s interesting is as the economy continues to expand, albeit modestly, recruiting and retaining top talent, in what these business leaders see as a tight labor market, is becoming an even greater priority.

According to the survey, 61% of CEOs expect to increase the number of workers on their payrolls, just above the 58% recorded last month and last year. Just 5% plan to reduce their workforce. Three-in-four firms (76%) are planning an annual wage increase for their employees. Rather than social or political pressures, firms that are planning wage increases were more likely to report competitive pressures from a tightening labor market. Consider also that one-in-three small firms reported that they had lost workers due to higher wage offers by other firms in the May survey.

As the labor market continues to tighten, and competition for workers intensifies, we’re seeing a renewed focus on workplace culture, employee development, and attractive compensation packages – all designed to recruit and retain top talent. In this month’s The Pulse of Small Business video, we visited Jessica Hawthorne Castro, CEO of Hawthorne Direct in her office in LA, where she shared her insights on how she is navigating the tight labor market at her brand response advertising agency.

See what she has to say, and I invite you to offer your ideas and strategies as well!

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