WASHINGTON — Based on data recently released by the U.S. Chamber of Commerce for the third quarter of the year, small-business owners believe the economy is on the upswing.
The Q3 MetLife and U.S. Chamber of Commerce Small Business Index hit its highest score since the start of the pandemic as small-business owners see an improving economy. The Index score, which measures small-business owner confidence, jumped this quarter to 69.2 from 63.1 thanks to a 9% increase in the share of small businesses (33%) that say the economy is in good health.
The report went on to say that 66% of small businesses also reported that their business is in good health and 72% said they are comfortable with their cash flow. Both measures jumped several points from last quarter.
“Main Street employers are showing remarkable resiliency in the face of high inflation and a shortage of workers,” says Tom Sullivan, vice president of small business policy at the U.S. Chamber of Commerce. “With fears of a recession likely in the rearview mirror and inflation starting to ease, small-business owners are feeling a lot better than they were a year ago.”
Inflation, Employee Retention Still a Challenge
Over half (52%) of small-business owners say inflation is their biggest challenge, still around a record high which has been consistent over the last year. There was notable concern this quarter about wage inflation as 56% said keeping up with employee salary expectations is a challenge.
Amid the ongoing worker shortage, there has been a slow uptick in concern for employee retention and being able to afford employee benefits. Small businesses are twice as likely to say employee retention is one of their biggest challenges compared to two years ago (15% vs. 7% in Q3 2021).
The report stated that this quarter’s survey asked small-business leaders about the unique benefits and advantages that small businesses can offer employees in a competitive job market.
Roughly nine in 10 say their company feels like a family and that this environment has helped them retain employees (89% vs. 77% in Q3 2021). Similarly, 82% agree that small businesses are uniquely qualified to provide employees with connections to — and support from — upper management.
Most (70%) small businesses say they are actively addressing employee mental health as a priority right now, up from 60% in Q3 2021. Most (68%) report utilizing at least one resource to assist with employee mental health, including encouraging employees to take mental health breaks during work (32%) or offering partial or full reimbursement for childcare (32%).
As small-businesses operators begin to feel more optimistic about the economy and their day-to-day operations, this quarter’s data shows a keen focus on improving over the long term by hiring — and keeping — the right talent.
“Employee care is an essential element to an engaged workforce as well as to the success of a small business,” says Cynthia Smith, senior vice president, regional business at MetLife. “It is encouraging to see the majority of small-business owners focusing on their employees’ mental health and leveraging available resources. By doing so, they are building an environment that attracts and retains a loyal, more productive workforce.”
About the Small Business Index
The MetLife and U.S. Chamber of Commerce Small Business Index is part of a multiyear collaboration by MetLife and the U.S. Chamber to elevate the voice of America’s small-business owners and highlight the important role they play in the nation’s economy. The quarterly Index, an online survey of approximately 750 small-business owners and decision-makers, is designed to take the temperature of the sector, see where small-business owners are confident, and where they are experiencing challenges.
The Q3 2023 survey was conducted from July 20 to Aug. 8, 2023.
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