If economic trends continue as expected, Friday's all-important jobs report will show further strengthening of the labor market and a declining jobless rate across the nation.
With national unemployment at a 10-year low, the U.S. economy has arrived at a pivotal moment. In conversations with small business owners in my role as executive vice president and head of business banking at U.S. Bank, I hear a renewed sense of economic optimism. While many are still recovering from challenging times, small business owners in the 25 states where we operate feel more positive about the U.S. economy than they have in years and, importantly, are making plans to expand, invest and hire.
Every year, U.S. Bank surveys small business owners, and this year’s findings confirm the optimism is real: Nearly 80 percent say their own business is stronger than ever. Forty percent say they plan to make a capital expenditure to expand their business in the next year and about one-fourth expect to increase the number of people working for them, both eight-year highs in the survey.
Yet a cloud hovers above this sunny outlook, threatening to hold back this much-needed growth.
Small business owners are struggling to find and retain quality employees, a development that’s hindering their ability to invest and grow. A whopping 61 percent of owners we surveyed said they’re experiencing extreme or moderate difficulty finding quality employees to expand their business. The concern is particularly acute in rural areas; however, urban small business owners also cite the lack of skilled employees as a problem.
Our region includes states where the unemployment rate continues to reach historical lows, including Colorado, Illinois, Arkansas, Oregon and Wyoming. Some small businesses are adapting by offering on-the-job training but others are curtailing growth expectations.
This trend has not gone unnoticed by the Federal Reserve, which noted in its latest report on regional economic conditions that a "larger number of firms mentioned higher turnover rates and more difficulty retaining workers." The Fed notes that the labor shortages combined with the need to pay higher wages are "restraining growth" in some sectors like manufacturing, transportation and construction.
Small businesses are the lifeblood of our economy — creating jobs, opportunities and resources in the cities and towns where they operate. They know that if they do right by their employees and communities, their employees and communities will do right by them.
So it's important that policymakers in Washington consider the impact their policies will have on small business. Whether it is tax reform, health care policy or financial regulation, the legislation Washington implements will determine whether small businesses are helped or hindered as they look to add jobs, expand and ultimately strengthen our economy.
Businesses should not have to scale back their growth plans simply because they can't find enough workers. While the 4.4 percent unemployment rate is low, there are still many people who want to work but are not currently employed. This includes people who have lost a job, are re-entering the workforce or are new to the job market.
A significant chunk of those individuals are older — with 1.3 million Americans age 55 and older looking for work but unable to find it, according to the Bureau of Labor Statistics.
Some economists say the lack of available workers is exacerbated by the current tax system, which penalizes secondary earners in a household. Policymakers should consider whether changes to the tax code could prompt more non-working spouses back into the labor market.
At U.S. Bank, our primary role is being a trusted banking partner, and we're working with thousands of small businesses across the nation to ensure they have the tools they need to succeed.
Part of establishing that trust is providing capital. During the past three fiscal years (2014-2016), U.S. Bank has completed more than $2.4 billion in all types of Small Business Administration-backed loans. But it's also about helping small businesses with decisions large and small, like where to locate a store or office, when to expand and how to ensure employees have strong ethics.
Now Washington has to do its part by creating policies that encourage people to work, reward small businesses for expansion and growth and provide incentives to train workers with new or improved skills. At a moment when the nation is focused on job creation and economic strength, we must work together to ensure that our policies incentivize small businesses and give them the ability to expand, building stronger businesses, stronger communities, stronger workforces and a stronger economy.
Ross Carey is executive vice president of business banking at U.S. Bank and chairman of the Consumer Bankers Association.
This piece originally appeared in The Hill.