The Dual Nature of the Crisis

Small business owners face two interconnected problems that have persisted for over five years. This past July, 36% of businesses reported having job openings they cannot fill, representing levels 44% above the historical average of 25%. Simultaneously, 48% of businesses report having few or no qualified applicants for their open positions.

This isn’t simply about worker availability. The data shows that even when applicants exist, nearly half of businesses find them inadequately qualified. During the peak crisis years of 2021-2022, the percentage of businesses with unfilled positions reached 46-47% while qualified applicant shortages affected 55-56% of businesses.

The Structural Nature of the Problem

The persistence of both metrics suggests this small business labor shortage reflects deeper structural changes in the workforce rather than a temporary disruption. Both job opening rates and qualified applicant shortages have remained consistently elevated throughout the five years, with no clear trajectory toward historical norms.

The data shows that July 2025 levels, while improved from peak crisis years, still represent significant departures from pre-2020 baselines. This indicates that the labor market disruptions that began in 2020 have not resolved despite economic recovery in other sectors.

The combination of widespread unfilled positions and persistent applicant quality concerns suggests small businesses face challenges that extend beyond traditional supply and demand dynamics in the labor market.

What Can Be Done?

How might small businesses address these persistent dual challenges?

Consider whether internal training programs can develop the necessary skills rather than competing for scarce, qualified candidates.

Investigate partnerships between trade associations and local educational institutions to help build the industry-specific talent pipelines needed for sustainable workforce solutions.

The data clearly indicate that traditional hiring approaches have proven insufficient for five consecutive years; strategic workforce development may be the path forward.

The post Small Business Labor Shortage: The 5-Year Crisis That Refuses to End appeared first on Strategic Thinktank, Inc. | Your SMB Experts | Consulting services for small and mid-sized businesses.

The Pricing-Profit Disconnect

During this period, the net percentage of businesses raising prices and their reported net profit trends moved in opposite directions. The years with the highest pricing activity (2022-2024) coincided with periods when more businesses reported declining profits than improving profits. Conversely, as pricing activity moderated in 2025, profit trends began stabilizing.

This pattern suggests that pricing increases alone don’t guarantee sector-wide profitability improvements. Customer response and market dynamics effectively constrain pricing power, even during inflationary periods.

Behind the Disconnect

The available data suggests that businesses faced multiple challenges during periods of declining profits. In July 2025, businesses citing declining earnings identified “increased costs” and “sales volume” as primary factors, indicating that pricing adjustments alone were insufficient to address underlying profitability pressures.

Labor quality continues to be identified as a significant concern, ranking as the top business problem for 21% of respondents in July 2025. This suggests that operational challenges beyond pricing decisions affect business performance.

The 5.5-year dataset demonstrates that even when businesses had apparent pricing power during crisis periods, overall sector profitability remained negative, indicating systematic constraints on the effectiveness of pricing strategies alone.

Looking Forward

Small businesses appear to be adapting by focusing on operational improvements rather than continued price adjustments. As potential tariff policies loom, this historical data suggests that companies may need strategies beyond pricing to achieve sustainable profitability improvements.

Ready to navigate this complex business environment with confidence? Schedule a strategic consultation to discuss how these trends impact your specific industry and growth plans.

The post Small Business Pricing Strategy: What 5.5 Years of Data Reveals About Profitability appeared first on Strategic Thinktank, Inc. | Your SMB Experts | Consulting services for small and mid-sized businesses.