Labor Skills Gap Continues to Expand for Small Business – Here’s How to Minimize Its Impact

 In Human Resources, Small Business

The economy has seen significant improvement in activity over the last couple of years. Companies large and small are hiring. There is one glaring issue, however. Many technical jobs are seeing a labor skills gap, and it’s only expected to grow. In fact, by 2025, it’s predicted that the country will produce 1 million fewer technical workers than needed. And with larger corporations having the resources to better attract and recruit talented new hires, it will be small businesses that are hardest hit.

It was discussed at a recent congressional hearing. Small business experts pointed out the issue as one of the most significant that small businesses will be facing. Virginia Representative Dave Brat, a Republican, agreed, stating: “I heard this in person when I was traveling around my district, dozens of business leaders tell me all too often that they can’t find a qualified skilled workforce to fill job vacancies.”

Further intensifying the issue is the push for young adults to obtain four-year degrees, rather than encouraging them to learn a trade. Society often portrays technical jobs as lower social status than those requiring a degree. Often, however, technical jobs are just as stable and well-paying, if not more so.

Some of the experts that testified offered potential solutions to the problem, like Mercatus Center research fellow Michael Farren. He stated, “In the case of training, if we have a skills gap and job applicants applying to businesses, then we should reduce the cost, or find ways to reduce the cost, of acquiring new skills.”

Additionally, Gardner Carrick, the vice president of strategic initiatives at The Manufacturing Institute, pointed out that some are addressing the issue through apprenticeships or youth programs showing what it’s like to work within a certain industry.

Skills Gap Solutions: Train, Retain, Replace

The simple reality is, if things go as predicted, there will be a significant gap in skilled labor. Small businesses of all kind will have to respond appropriately or they’ll be forced to take significant hits. If there are too few qualified workers, companies will have to implement successful training programs for new-hires. It’s a bit of an initial investment to make, but will pay off when they can effectively complete their job tasks. Further, reduce future vacancies through retention by offering benefits and creating a positive work culture. Finally, tech may offer an alternative solution to the labor shortage – automation.


Good training programs not only create great employees, but can sometimes work to attract new employees to begin with. If a small business is known for its excellent training programs – through apprenticeships, internships, or something else – it can act as an incentive for some to apply.

You may be thinking, what will this cost me? Well, it depends. Training programs can get costly, but if you work closely with the team you already have in place, you can use your expertise to create a program relatively inexpensively. Hands-on work also allows you to receive some labor even while they train.

Apprenticeships and internships are some of the main types of training programs you can offer.


A college education is costly. Apprenticeships can be a great alternative for young adults. They’ll be paid as they work and learn a skill in the process. Once they’ve proven themselves through the apprenticeship, they can become a permanent employee within your company.

The benefits for them are obvious – save the time and money of college and instead receive an education that can be readily applicable for an almost-guaranteed job.

The benefits for you are employees that are trained exactly as you’d like them to be. Just think: if they were trained by a college or other company, they’d probably require some new education while working with you to do things the way your company wants them done. You ensure your new-hires are properly trained to do your specific job correctly.


Internships, as opposed to apprenticeships, are often used to attract college-attending students. Although you may be competing for attention against some larger companies, internships can be valuable in training current students all the practices of your company. You’ll give the students a chance to apply their education in real-world ways. It can even act as a way to give you new ideas for your business. If college education is important for your business, rather than training new-hires in specific skillsets, then this may be the way to go. But beware that it may be difficult to attract this kind of talent.


Culture, compensation and benefits, and responsibility can all act as reasons employees choose to stay. A combination of these makes it really difficult for current employees to leave.


A positive overall work culture is one way to convince current employees to stay. Through open-spaced work environments and company events, you can create a tight-knit and fun working culture that is difficult to tear away from. Some companies that do culture best: Zappos, Google, Facebook, Adobe.


You should definitely strive to compensate your employees as fairly as possible. Those who come for the money may also leave for the money, so compensation alone may not be the glue that your company needs to retain its current staff, but paying too low will eventually drive that employee away. If you can’t compensate as well as you’d like in monetary value, consider offering unique or valuable assets. Like personal/work life flexibility, free lunches, or something else.

Personal Stake/Responsibility

Giving employees a certain level of responsibility and the autonomy to complete certain job tasks allows the employee to feel empowered and as though they affect change within the organization. Additionally, offering them some stake in the business and to be directly compensated through the company’s performance can act as great ways to convince them to stay on. The more involved they are with the success of the company, the less likely they’ll be to look elsewhere.

Replace Labor

As the skill gap widens, it’s important to remember that there is a silver lining – technological advances are continuing to take place. As a result, where a labor source can’t be replaced by a person, AI, robots, and other forms of technology can work to take their place.

Make the Best of the Skills Gap

The effects of skills gaps will only worsen over the next few years, but with creative training, retention, and replacement solutions, your small business may come out unscathed.

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