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Illustration: Trent Joaquin/Axios

Small businesses aren’t thriving quite like their large corporate counterparts.

Why it matters: It's a signal of the bifurcated pandemic recovery, in which the biggest U.S. companies have reported record earnings growth as they leveraged higher wages to help recruitment and used their scale to make cost cuts.

  • Meanwhile, small businesses have had limited capacity to execute like their larger competitors.

By the numbers: About 53.3% of small and medium-sized businesses missed out on revenue opportunities due to staffing issues, according to a new survey conducted from July 12 to 15 by Salesforce.

  • Of that group, 56.6% said staffing issues were responsible for at least an 11% drop in revenue over the past six months.
  • This sentiment was echoed in the National Federation of Independent Business (NFIB) July jobs survey, which found 63% of small businesses were hiring and 89% of that group said there were few or no qualified applicants.
  • In another July survey, the NFIB found most small businesses said the last three months’ worth of earnings were lower than the prior three months worth of earnings. A top reason for this was disappointing sales volumes.

What they’re saying: When asked why there’s been such a stark contrast between small business and S&P 500 earnings in recent months, Holly Wade, executive director of the NFIB Research Center, tells Axios that staffing issues explain a lot, but not all of, the bottom line woes.

  • "Small businesses have a harder time absorbing increased costs and passing them along" while staying competitive, she says.

Between the lines: It may seem like the obvious solution is to just raise pay more aggressively.

  • But raising pay for new applicants often means having to raise pay for other existing employees, which is costly.
  • Also, raising pay now gives employers less cost flexibility in the future as employers would rather avoid having to cut pay down the road.

The bottom line: Even in a booming economy, many small businesses will find themselves at a disadvantage relative to larger corporations if they have to compete for scarce resources like labor.

Editor’s note: This post was updated to include data from Salesforce.

Go deeper

Updated Sep 14, 2021 - Axios Events

Watch: A conversation on post-pandemic recovery for Black-businesses

On Tuesday, September 14, Axios markets reporter Courtenay Brown and business reporter Hope King discussed the economic recovery of Black-owned small businesses, featuring Congressional Black Caucus Chair Rep. Joyce Beatty (D-Ohio) and U.S. Black Chambers President & CEO Ron Busby. 

Rep. Joyce Beatty addressed how the Congressional Black Caucus and Congress are working together to help Black-owned businesses in a post-pandemic era, the primary challenges that the Black-owned business community endured during the pandemic, and how unemployment rates among Black communities vary across the nation. 

  • On government efforts to provide financial relief to small businesses: “When we think about the value of the Congressional Black Caucus and how we had to work with them, many of us small business owners, I know firsthand as a former small business owner how hard it is to make payroll in a normal time. Here’s the good news: 95% of the Biden-approved PPP loans went to small businesses with 20 or less employees, and that was very helpful.” 
  • On consistently disparate unemployment rates in Black communities: “When we hear, 'Oh, unemployment has gone down and people are working,' well, those numbers were never the same for minority-owned businesses, especially Black-owned businesses. The numbers were always double, and we’re still dealing with that.” 

Ron Busby illustrated the progress of Black small businesses in post-pandemic recovery, how efforts from Federal entities and the private sector have assisted in that recovery, and what types of aid he believes are most essential in helping Black-owned small businesses thrive. 

  • On the current state of recovery for Black-owned businesses: “Businesses that are owned by African-Americans and Black people across the country are starting to feel extremely optimistic about the future, but the challenges still exist. The number one challenge for Black-owned businesses is obviously access to capital.” 
  • On adjusting government-run initiatives to better serve Black communities: “We had to go back and make sure that we adjusted those packages, those stimulus opportunities, to make sure that our Black businesses could participate. As you see new programs being rolled out, you’ll see that the US Black Chamber is there to make sure that small, diverse, and primarily Black firms are included in the conversation, as well as being included in the stimulus packages.”  

Axios SVP of Events & Creative Strategy Kristin Burkhalter hosted a View from the Top Segment with Facebook’s Vice President of Business Engineering and Partner Solutions, Alvin Bowles, who discussed how Facebook is supporting Black-owned businesses through various digital exposure initiatives. 

  • “It’s just important to note that individuals are trying to leverage the digital economy to be able to actually decrease that distance between innovation and execution, and trying to figure out the best way to be able to leverage opportunities to have individuals discover their businesses. We feel like there’s an enormous responsibility that we have. As we head into this holiday season, it’s now more important than ever to really focus on the discovery economy and that every good idea deserves to be found.”  

Thank you Facebook for sponsoring this event. 

Updated 1 hour ago - Politics & Policy

Pentagon approves request for 100 National Guard troops for "Justice for J6" rally

Security fencing has been reinstalled around the Capitol. Photo: Drew Angerer/Getty Images

Defense Secretary Lloyd Austin has approved a request from Capitol Police to provide 100 D.C. National Guard troops in case law enforcement requires additional support at Saturday's "Justice for J6" rally at the Capitol.

Why it matters: Security preparations have ramped up ahead of the pro-Trump demonstration, where hundreds of protesters sympathetic to the Jan. 6 Capitol attack are expected to gather.

Biden threatens new sanctions against Ethiopian officials over Tigray conflict

Photo: Al Drago/Getty Images

President Biden on Friday signed an executive order allowing the Treasury and State departments to impose sanctions against Ethiopian officials "responsible for, or complicit in, prolonging the conflict" in the Tigray region.

Driving the news: Hundreds of thousands of people are facing famine conditions in Tigray, but less than 10% of the needed humanitarian supplies has reached the region over the last month "due to the obstruction of aid access" by the Ethiopian government, according to Biden administration officials.