Editor’s Note: Mike Zaffaroni is the owner of Liberty Landscape Supply, a small business in Jacksonville, Florida, with more than 100 employees across four locations. The opinions expressed in this commentary are his own.
The last time the American economy experienced explosive inflation, my company, Liberty Landscape Supply, wasn’t even in business yet. In fact, the prices for many of our core products have remained the same since I bought the company in 2007. But now we are preparing for the most challenging environment since the Great Recession — and possibly since the soaring inflation of the late ’70s.
At Liberty Landscape Supply, we have been fortunate and worked hard to grow the company from just one employee in 2007 to 107 and counting today. We sell, deliver and install landscape supplies to homeowners and contractors seven days a week, and are thrilled to be located in Florida, where our industry thrives year-round. Right now, our four retail and commercial landscape nursery locations around Jacksonville, Florida all have great potential and an appetite for growth. But numerous headaches, including inflation and the ongoing labor shortage, are keeping that growth from becoming reality.
The most impactful increases have come from soaring labor costs, both for hiring new employees and retaining existing staff. We are also seeing higher costs from our suppliers for almost every product we sell, including plants, trees, gravel and mulch. On average, these items have increased 13.4% from January to April compared to the same period last year. We also operate 37 vehicles that consume diesel fuel, and those costs are up 87% versus last year.
Small businesses like mine don’t have the same ability as larger companies to absorb costs, so we’re forced to pass them on to our customers. We’d like to be able to pass along even more of our costs to customers, but struggle to do so as quickly or as efficiently as we need to. Data from the MetLife and U.S. Chamber of Commerce Small Business Index says 85% of small businesses are concerned about the impact of inflation, and 67% have raised prices to cope.
And to make matters worse, inflation is coinciding with a worsening worker shortage crisis. We’ve never had so many potential opportunities to grow, serve customers and sell goods and services, and at the same time be limited in our ability to perform because we cannot find talent.
We currently have 15 job openings, and would be willing to hire even more employees in anticipation of additional future business growth. Operating while 20% understaffed forces us to increase wages to attract more team members. We then must raise wages for existing staff to remain equitable. Our entry-level wages have increased 27% in the last 12 months.
To pay the higher wages to our new and existing team members, we are raising our prices to hold our gross and profit margins and stay afloat.
The US Chamber of Commerce has said that we can’t get inflation under control unless we fix the worker shortage. It has proposed expanding legal immigration paths, like H-2A and H-2B visa programs, as one of many actions needed to expand our labor force. These visa programs are unique in their ability to dial up and down based on the labor market demands. For my business, expansion would greatly help me with staffing shortages. The Department of Labor and Department of Homeland Security recently announced they were making an additional 35,000 H-2B visas available during the second half of this fiscal year, but that likely won’t be enough to fully meet busy summer demands.
The Federal Reserve has taken the first steps to get inflation under control by raising interest rates. Unfortunately, the Fed is reacting too slowly to this pressing issue, and the pain of ongoing inflation will be disproportionately laid on small businesses. Small businesses need more serious action from the Fed — and fast.
Congress and the administration need to act now, too, by focusing on policies that would ease inflation, like increasing legal immigration to help with the worker shortage, investing in domestic energy production to lower gas prices, and easing the crushing regulatory burden on food producers.
Today’s reality is that inflation will hurt small businesses more than ever. Small businesses are the fabric of this country, employing and improving communities across the nation, and we need them to be successful. We can’t relive the inflationary times of the late ’70s and early ‘80s.
Main Street needs Washington to rein in inflation and fix the worsening labor shortage crisis that is preventing me and hundreds of thousands of other small business owners from growing.