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For employers, there's no downside to acting as though employees are always in short supply.
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I recently heard two small-business owners separately lamenting that each of their star employees had left for better job opportunities. You could hear the panic in their voices. Clearly, these employers were going to have a tough time replacing these key employees. Is this just business as usual, or is it a sign of an emerging labor shortage that is poised to play havoc with the economy?

Like global warming, the labor shortage phenomenon has been a subject of much debate. Some say it exists, and others say it doesn't. With baby boomers retiring, the theory goes, those workers who remain in the workforce will be in short supply. Employers will be forced to bid up salaries, which will create inflationary pressures on the economy.

Every month, I track the small business economy by looking at payroll data for our 18,000 small-business customers. Believe it or not, this month marks the 20th consecutive month of continued salary growth in the small-business economy. This salary growth suggests that there is indeed a growing shortage of talented labor. It's a bit like the melting icebergs. If you don't believe in global warming, how do you explain the fact that icebergs are melting at an unprecedented rapid rate?

The good news is that both believers and skeptics can benefit from assuming that there is a looming labor scarcity issue. Indeed, the prescription for surviving a labor shortage can be beneficial to any business owner, even if a labor shortage never materializes:

Focus on employee-retention programs. If employees are scarce, your competitors will soon be storming your fort in an attempt to steal your employees. That means you need to make your workplace an enjoyable place for current employees. You also should consider improving your employee benefits and employee training programs.
Plan for higher salaries. If there's a chance that salaries will continue to rise, why not build that into your plans? In the worst case, you will find yourself with extra profits if you never have to raise salaries. If salaries do keep rising, you will be well prepared.

Improve productivity. If labor is tight, you need to think about how to get more out of your workers. Could an investment in productivity tools or automation equipment allow your workers to contribute more per capita to the growth of your business? Now would be an excellent time to find out.

Invest in recruiting capabilities. If workers are scarce, the best recruiting will win the war for talent. Assess your recruiting capabilities and take steps to improve.

Build a network of contractors. Flexible companies survive uncertain times best. Contractors can ease your human resource challenges by allowing you to bring in talent on a just-in-time basis. If you can't find a talented full-time worker, simply tap into the network of talented contractors you've developed. Not having to pay payroll taxes for contractors is an added bonus, although you will want to make sure you are in full compliance with IRS regulations concerning independent contractors.

As you can see, there's no downside to the actions outlined above. Being prepared for a labor shortage just means you are doing the things that most smart business owners are already doing. The bottomline? Whether you are a believer or a skeptic, you'd do well to take labor shortages seriously.

I've had the good fortune of having hired enough good people, including employees and contractors, to grow SurePayroll to the point where we are considered a national leader in our highly competitive industry. Still, to offer good advice in this column, I need your help. From hiring and firing, to benefits and retention programs, and compensation and incentive programs, if you've got a topic you’d like me to cover -- or an HR incident you'd like to see discussed or some advice that you'd like to pass along to others -- please let me know. You can e-mail me anytime at malter@surepayroll.com.

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