The Future Small Business Workforce: Will Labor Shortages Exist?
The Available Evidence Is Less Than Perfect
Bruce D. Phillips is a Senior
Fellow in Regulatory Studies at
the National Federation of
Independent Business (NFIB)
Research Foundation. In addition
to regulatory studies, he has
written books and scholarly articles
on general small business
problems. Issue areas have
included business failure, business
formation, health care, technology issues, and the
influence of government policies on small firms at the
local level. He was director of the Small Business
Administration’s Office of Economic Research from
1993-2000 and has been an Adjunct Professor at
Georgetown University.
Several economic and demographic trends make it unlikely that small business owners will face future labor shortages. This is due to three factors: postponing the retirement of current workers, the continued influx of immigrants, and an increase in self-employment as potential retirees become small business owners and/or consultants. While the aggregate data do not suggest general labor shortages, migration patterns suggest spot shortages in specific industries and in specific parts of the nation. Two other factors may increase future small owner costs: increases in the demand for benefits by older workers and employer liability issues that will increase already expensive liability insurance.
This paper won the NABE Contributed Paper Award presented at the NABE Annual Meeting, October 3, 2004. PNC Financial Services Group sponsored the award.