Ashworth’s Clothing in Fuquay-Varina opened in 1937. It survived through some trying times, such as World War II, the Vietnam War, and the Great Recession.
Owner Steve Ashworth says the current state of the world economy offers some unique challenges, too.
“This is unusual, especially the government’s lockdown in 2020, which impacted us,” he told Carolina Journal.
Small businesses across the country, like Ashworth’s, are struggling to get back to normal after those closures. Now, they’re facing runaway inflation, growing to 7% in December, the highest rate in 40 years. Rising gas prices and food prices compound problems for small businesses faced with competing with bigger businesses, plus the rising health care insurance cost and wages for employees.
Small business owners report inflation as their second biggest problem, with quality of labor topping them, according to the National Federation of Independent Business’ Small Business Optimism Index report. This is in line with the results of the November Civitas poll, in which 77% of 600 likely general election voters reported inflation as a top issue.
The NFIB surveyed about 639 business owners, mostly from the retail, services, construction, and agriculture sectors, with the largest group in the study having three to five employees.
About 49% of owners reported having trouble finding enough people to fill job openings. Of those surveyed, 31% said few of their applicants were qualified, and 26% had reported no applicants. To compete with bigger businesses, 48% reported having raised pay, with 32% planning to.
Not every small business owner can afford that. According to Cigna + Oscar alliance’s July survey, 70% of 406 small-business owners and decision-makers said health care insurance “wasn’t built with small businesses in mind.” Furthermore, 60% reported limiting health care benefit options due to costs, and 59% reported being unable to compete with larger companies on benefit offerings.
Ashworth is looking for more workers, particularly people willing to work full-time. Two full-time workers and several part-time employees run Ashworth’s.
“There doesn’t seem to be any hope on the horizon,” he told CJ.
To further complicate the hiring process, Ashworth’s business is highly specialized, and employees have to be equipped with the proper skills and experience to handle the work.
“Custom clothing requires a fair amount of knowledge,” he admits.
For Ashworth’s, circumstances began to improve on April 2021, when the state government began to lift their mandates. But new problems surfaced, like labor shortages and supply chain issues. With their products stuck at the Southern border and in California ports, Ashworth’s has dealt with increasing costs encompassing freight, containers, insurance, building repairs, and tailoring. The Christmas season was especially tough.
Ashworth’s Clothing will have to raise prices to compensate.
“Starting March 1, I am not going to have any other choice,” Ashworth said. “Labor costs are going to increase especially.”
According to the NFIB, 49% of small business owners planned to raise prices, which was 54% in the November report. About 57% had already raised prices, down from 59%. The most affected sector is wholesale followed by construction.
To survive, businesses must change their plans according to the economy, a John Locke Foundation expert says.
“To combat inflation and maintain a productive workplace, small businesses must adapt by raising prices, streamlining services, automating, eliminating less-popular products, or employing creative means to stay afloat as costs of doing business rise,” said Paige Terryberry, JLF senior analyst for fiscal policy.
While the retail industry reported a record holiday sales growth of 13.7% year-over-year for the 2021 season, retail consults Customer Growth Partners estimated that more than half of that growth (6.7%) is due to the record inflation in December.
Lauri Salovaara is an intern with The Carolina Journal. He is a senior, studying Political Science at North Carolina State University.