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2022 Report on Hiring and Worker Retention: Based on the 2021 Small Business Credit Survey

Following the start of the COVID-19 pandemic in March 2020, many employers laid off or furloughed their workers amid heightened uncertainty and government-mandated closures. 

While many businesses rehired workers or brought on new ones as the pandemic wore on and closure mandates were lifted, the 2021 Small Business Credit Survey (SBCS) data show that 43% of small employer firms (that is, businesses with 1 to 499 employees) had fewer employees at the time of the survey than they did in 2019 before the pandemic began. This publication examines workforce issues from the perspective of small businesses, relying on findings from the SBCS module on hiring and retention challenges.

With respect to hiring and worker retention, this publication finds

  • Seventy-five percent of employer firms said they attempted to hire workers in the 12 months leading up to the survey, a small increase from the share of firms in the 2018 survey that attempted to hire workers (71%). However, firms in the 2021 survey were much more likely to say that hiring was challenging, as 44% of firms in the most recent survey said that hiring was "very difficult" compared to 27% of firms who said the same in 2018.
  • Among firms that reported hiring was somewhat or very difficult, 78% cited a lack of applicants as a reason. Additionally, 56% said that applicants lacked job-specific skills or experience, while others cited competition from other employers (40%), difficulty retaining newly hired works (31%), and difficulty finding applicants who were able to pass a background check, credit check, or drug test (16%) as reasons for hiring challenges.
  • A majority of firms that reported hiring challenges said they responded by increasing wages (59%) or by shifting more work to existing employees and the owner (55%). While higher-revenue firms most frequently raised wages, firms with less than $100,000 in annual revenues most often reduced their operations.

Suggested Citation

“2022 Report on Hiring and Worker Retention: Based on the 2021 Small Business Credit Survey.” 2022. Small Business Credit Survey. Federal Reserve Banks.

The views expressed here are those of the authors and not necessarily those of the the Federal Reserve Banks. Data used in this report may be subject to updates or changes.