The CBIZ Main Street Index – Fall 2024 finds the majority of SMBs are evaluating staff levels, with many unable to fully utilize their workforce amid the looming presidential election

CLEVELAND, October 22, 2024--(BUSINESS WIRE)--CBIZ, Inc. (NYSE: CBZ), a leading provider of financial, insurance and advisory services, has released the Fall 2024 Main Street Index, taking the pulse of and gauging the outlook for small and mid-sized businesses (SMBs). The index revealed that companies are facing growing staffing challenges, as rising business costs and economic conditions are prompting potential layoffs. Fifty-one percent of SMB owners surveyed say they are evaluating or changing current staff levels and outsourced partners to prepare for a potential economic downturn. Additionally, 62% of businesses report they are able to utilize their staff to its full capacity, down 7% from June.

"We are at an inflection point in the economy, where uncertainty is high, and labor data trends are inconsistent. Many businesses, especially SMBs, are reevaluating their staffing and operational strategies in response to rising costs and economic shifts," says Anna Rathbun, Chief Investment Officer at CBIZ Investment Advisory Services. "The Federal Reserve has embarked on a cutting cycle, but the impact of monetary policy comes with a lag. We are seeing significant impacts of the sustained restrictive policy across rate-sensitive sectors, sluggish M&A activity and dearth of IPOs. Slower financial activity may have broader implications for Main Street, including workforce utilization and the potential for tougher times ahead."

While the rate of month-over-month inflation has fallen close to the Federal Reserve’s benchmark of 2%, SMBs continue to feel lagging cost pressures. Nearly one in five (19%) have experienced a significant increase in the cost of goods and services, with almost all other companies surveyed seeing a modest increase. Additionally, more than 18% have seen a sharp rise in labor costs. Much of these added expenses continue to be passed down to the customer, as 53% have increased their prices over the past few months. While most have added 1% to 4% on their price tags, more than 28% have raised costs by 5% or more.

Rathbun adds: "There are signs in our data suggesting inflation is being baked into the major economic indicators, including employment cost. Many SMBs want to hire more workers, but there is a shortage of skilled professionals that keeps the cost of labor high. Fifty-six percent of respondents in our survey noted the ability to hire skilled labor as a top concern. In addition, the cost of fringe benefits, such as health insurance, has also surged, increasing business overhead. Add the uncertainty around tax policy in an election year, small and mid-sized business owners are very much in wait-and-see mode right now."