Running Your Business Through a Labor Shortage

Picture this: a contract lands on your desk. You have the skills, the reputation, and the client relationship to win it. But you can’t bid because you don’t have the people to do the work. Bank of America CEO Brian Moynihan described exactly this problem among the bank’s small business clients. “Their issue right now is, can I get the labor I need to bid the contracts, to do the work I’m doing? Because the immigration policies haven’t settled in yet and that’s causing people concern,” he told reporters.

That’s not a staffing inconvenience. That’s revenue left on the table by owners who are fully capable of earning it.

This piece gives you a framework for running your business through the labor shortage, not a recap of how bad it is. You’ll walk away with a clear split: what to lock down now, what to keep flexible, and three signals to watch every month so you’re not caught off guard.

Nine Out of Ten Hiring Owners Can’t Find Qualified Applicants

The NFIB’s November 2025 survey found that 89% of small business owners who were trying to hire reported few or no qualified applicants. One-third of all owners had job openings they were actively trying to fill. And 20% named labor quality as their single most important business problem, above taxes, above regulations, above everything else.

Why is the pool so thin? Unemployment sat at 4.6% in November 2025, and the Federal Reserve projects it will only dip to 4.4% by the end of 2026. There simply aren’t many people looking for work. If you run a 10-person team, that 33% unfilled openings number means something concrete: it’s like permanently operating with 3 empty desks. That’s the reality for a huge share of small businesses right now, and it connects directly to the broader trends shaping small business decisions in 2026.

A $100,000 Fee That Prices Out Small Employers

The H-1B visa is one of the main ways U.S. businesses legally hire skilled foreign workers. In 2026, new restrictions pushed the sponsorship fee to $100,000 per visa, according to the U.S. Chamber of Commerce. For a company with 500 employees, that fee might be manageable. For a company with 15, it’s a nonstarter.

So the legal path to hiring foreign talent is now priced like a luxury most small businesses can’t afford.

“There are a lot of communities where immigrant populations made up a significant portion of the consumer base, and suddenly you’re seeing that shift away.” — Neil Bradley, EVP and Chief Policy Officer, U.S. Chamber of Commerce

That’s the part people miss. Reduced migration doesn’t just shrink the worker pool. It also shrinks the customer base in towns that depended on those populations. Fewer workers to hire and fewer people buying lunch, getting haircuts, or calling for landscaping.

For a coffee shop or a lawn care company, the pipeline of applicants who used to show up isn’t refilling the way it once did. The neighborhood around you may have fewer wallets, too. This varies by region and industry, but the pattern is real. And with the new DOL contractor classification rule now in effect, even the workaround of hiring independent contractors has gotten more complicated.

Owners Are Optimistic. The Applicant Pool Isn’t.

Here’s the strange part. Confidence is actually rising. NFIB chief economist Bill Dunkelberg put it plainly: “Although optimism increased, small business owners are still frustrated by the lack of qualified workers. Despite this, more firms still plan to create new jobs in the near future.” Nineteen percent of owners said they planned to create new jobs in the next three months, the highest number in nearly a year.

A JPMorganChase survey found similar energy: 59% of business leaders in Indiana were optimistic about 2026, and 75% expected revenue growth. The ambition is there. As the chart below shows, the tension is that you can’t hire your way into growth if nobody’s applying. That gap between wanting to expand and actually being able to staff for it is creating a specific kind of stress you can read more about in our breakdown of the NFIB optimism gap.

What to Lock In Before It Gets More Expensive

When your biggest input is unpredictable, lock down the things you can control.

1. Vendor pricing and supply terms. Thirty-six percent of small business owners are already renegotiating supplier terms, according to JPMorganChase. If you haven’t started those conversations, you’re competing against people who already have a better deal. Ask for 6-month price locks, even if it means committing to slightly higher volume.
2. Your current team. Replacing an employee costs far more than retaining one. A $2/hour raise for a key person runs about $4,000 a year. Recruiting, training, and lost productivity from an empty seat can cost $15,000 or more. Offer schedule flexibility, small bonuses, or clear paths to more responsibility before someone else does.
3. Your prices. If your labor costs have gone up and your prices haven’t, you’re absorbing a hit that compounds every month. Raise prices now, while you can frame it as planned, rather than later when you’re forced to and it looks desperate. For context on the cost pressures building on small businesses, here’s a deeper look at the hard decisions owners face this year.

What to Keep on a 30-Day Leash

If you can’t reverse a commitment within 30 days, don’t make it right now unless you absolutely have to.

Start with advertising. Keep your ad spend month-to-month. Don’t sign an annual contract with a marketing agency or lock into a 12-month ad platform commitment. If conditions shift in Q2 or Q3, you want to be able to pull back or redirect without paying a penalty. Smaller, more frequent bets beat one big annual gamble when the ground is moving.

Apply the same thinking to inventory. Order in smaller batches. Turn stock faster. The goal isn’t to run bare shelves. It’s to avoid sitting on product you can’t move if demand dips in your area. And for staffing, lean on part-time or flex scheduling before you add permanent headcount. A full-time hire is a 12-month fixed cost. A part-time role gives you room to scale up or down as the quarter plays out.

Forty-seven percent of owners are building cash reserves right now, according to JPMorganChase. That isn’t hoarding. Think of cash reserves like keeping your calendar open on Fridays. You’re not wasting the day. You’re making sure you can say yes when something better comes along, or absorb a hit without scrambling.

AI Covers a Shift, Not a Role

Think of AI like a bench player on a basketball team. It doesn’t start the game. But when your point guard fouls out, the bench player keeps you in it. Fifty-nine percent of business owners now see AI as essential to their operations, per JPMorganChase. At the 1-to-50 employee scale, “essential” doesn’t mean replacing skilled workers. It means covering gaps.

Specifically: automating appointment scheduling so your front desk person can handle two other things. Using AI to draft first-pass responses to customer inquiries overnight. Generating proposal templates or invoice summaries that used to take someone an hour. These are real tasks that eat real time, and offloading them buys your existing team bandwidth to do the work that actually requires a human.

But be honest about the limits. AI doesn’t replace the plumber who shows up at the job site. It doesn’t replace the project manager who reads the room in a client meeting.

If you run a 6-person agency and one account manager quits, AI can draft the status emails. It can’t sit in the client meeting. Know where the line is.

AI helps you work with the team you have. But you still need to know when conditions around you are changing. Here are three signals worth watching every month.

1. Your own application-to-hire ratio. That’s the number of applications you receive divided by the number of hires you make. Track it every time you post a role. If it’s dropping, your local market is getting tighter and you may need to raise pay or widen your search.
2. The NFIB Job Openings report. It comes out monthly and it’s free. It tells you whether small businesses nationally are finding it easier or harder to fill roles. If the national number is getting worse while yours is stable, you’re in a relatively strong position. If both are dropping, tighten up.
3. Immigration policy updates from the U.S. Chamber of Commerce or SBA. Changes to visa programs, enforcement priorities, or fees directly affect how many people are in your applicant pool. One policy shift can change your hiring math within a quarter. The 2026 trends overview tracks several of these shifts in real time.

One Spreadsheet, Two Columns, 20 Minutes

This week, set a timer for 20 minutes. Open a spreadsheet. Make two columns. In the first, list every expense you’re locked into: leases, salaries, annual contracts, loan payments. In the second, list everything you could pause or cancel within 30 days: ad spend, subscriptions, variable inventory orders, freelancer retainers.

Add up both columns. If the locked column is more than 70% of your total spending, you’re too rigid for a year when your most important resource is this unpredictable.

You probably can’t fix the labor shortage. But you can build a business that bends instead of breaking while you wait for it to ease. That starts with knowing exactly where your flexibility is and where it isn’t.