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Help Wanted

Jobs are open at small businesses, but applicants don’t seem interested

Jeffrey Marino, ZipRecruiter.com

Sometimes even the highest expectations are exceeded. The job market did just that in October, adding 250,000 jobs and showing 3.1 percent year-over-year wage growth, which is the most wages have increased since the recession.

The quit rate, which measures the number of people voluntarily leaving their job to find a different (presumably better) one, is the highest it’s been since February 2001. It’s not just the unemployed who are finding new jobs — folks who were already gainfully employed are taking the opportunity to level-up in their career.

Unfortunately for mom and pop shops, it appears the majority of these upwardly mobile job hunters are opting for large, brand name companies. In October, there was one job available at large organizations for every four applicants, according to ZipRecruiter data. Opportunity was much higher at SMBs in October, when there was one job opening for every two applicants.

This means that overall a greater share of applicants are chasing jobs at big companies — a trend that only gets more extreme at the industry level, where we’ve observed job creation continue to increase at the SMB level especially, while applicant levels continue to dwindle. 

SMB job openings and applicant interest by industry

The situation is dire for small and medium businesses, especially in the agriculture, transportation and storage, and automotive industries.

We looked at the annual change in job openings and applicants to SMBs in every industry each month and found that SMBs continued to show robust job growth over time, as one might expect given the health of the economy.

Health care was the only industry that saw an annual decline in SMB job openings this October, which is likely the result of rapid consolidation and mergers of mega health-care systems that has been happening over the past several years.

While there are plenty of jobs to be had at SMBs, applicants don’t seem interested — there were year-over-year declines in nearly every industry this October. The technology, business, engineering and retail industries all have had annual declines in SMB applicants for the past five months.

Job seekers flock to big business

Annual growth in job openings for large organizations has been less consistent than with SMBs this year, and shows a pronounced seasonal pattern, with most growth occurring at the beginning and middle of the year. The seasonal pattern is even more stark among large organization applicants, presumably when many full-time job seekers flood the market in January and seasonal workers start their job search in August.

The hiring situation in October is the most striking. In a month when the Bureau of Labor Statistics reported record numbers of hires, wage growth and a rock-bottom jobless rate of 3.7 percent, job openings and applicants increased year-over-year in nearly every industry among large organizations, according to ZipRecruiter data.

Recent reports from payroll company ADP have also shown that SMBs had hiring trouble in October and that they are lagging behind their larger counterparts when it comes to filling positions. But why?

A survey of ZipRecruiter users conducted earlier this year revealed the majority of job seekers surveyed would prefer to work for an SMB, citing advantages such as the personal feel and ability to make an impact on the business. Of the 40 percent who said they would prefer to work at a large company, they cited better pay and more advancement opportunities as the reasons why.

Methodology

We used ZipRecruiter data on job applicants and openings by industry going back to January 2017 to calculate year-over-year growth for each month throughout 2018. Large organizations are defined as having 500 or more employees, and small and medium businesses (SMBs) are defined as those having fewer than 500 employees.