Labor shortages and cost pressures are top concerns for CFOs, survey finds

Good morning,

Although many CFOs are increasingly optimistic about the financial future of their firms, the decline in the labor force is affecting revenue, especially for small businesses. 

“If you look at the results of the survey, over half of the firms that reported challenges finding workers also reported the challenges impacting their revenue,” Sonya Ravindranath Waddell, vice president and economist at the Federal Reserve Bank of Richmond, told me.

Duke University’s Fuqua School of Business and the Federal Reserve Banks of Richmond and Atlanta released a report on July 14 based on a Q2 2021 survey of CFOs. More than 300 participants named labor quality and availability as the most pressing concern for firms —21% compared to 11% in the Q1 2021 survey. CFOs have indicated that revenue is below 2019 levels because they can’t get the workers, or in some cases, the materials to meet 2019 revenue levels, Waddell says.

“Our calculations indicate that, if we extrapolate from the CFO survey results, the labor shortage has reduced revenues across the country by 2.1%,” Waddell says. In 2019, “we didn’t face a very interesting conundrum of nine million vacancies combined with nine million unemployed workers,” she says.

On July 13, the U.S. Department of Labor released a report indicating consumer prices in June increased 0.9% from May and 5.4% over the past year. This is the most acute 12-month inflation spike since August 2008, according to a Fortune report

About 80% of survey respondents reported larger than normal cost increases. “More than three-quarters of firms are passing along at least some of those cost increases onto their customers,” Waddell says. “And customers are accepting those cost increases.” Outside of the survey, Waddell is hearing that some firms are “surviving with just some compressed margins for a while” or turning to automation to reduce the need for labor, she says.

More than half of survey respondents said spending has increased somewhat or significantly, according to the report. “If demand continues to boom, I think spending will continue to rise in the next quarter.” But a resurgence of COVID-19 cases, hospitalizations, and deaths would affect demand, Waddell says. 

Quick note: Rey Mashayekhi, who covers finance and politics at Fortune, will be filling in for me for the rest of the week. See you next week.

Sheryl Estrada

Big deal

Argyle Public Relationships Index, released on July 14, asked workers to rate their employers’ performance on environmental, social, and corporate governance (ESG) issues. The majority of U.S. respondents (76%) agreed their company performed well in health and safety, equity, and diversity. The data is based on a survey of 548 employed Americans.

Courtesy of Argyle

Going deeper

As companies prepare a return to work, strict social distancing decreases in the U.S., a Gallup report released on July 8 found. About 18% of Americans surveyed said they are completely or mostly isolating themselves from non-household members, compared to 75% in April 2020. In addition, 49% of adults surveyed who are employed said that work is "completely back to normal for them," according to the report. Meanwhile, 51% said it is not. 


Mario Beckles was named CFO at Guskin Gold Corp, a gold exploration company. Previously, Beckles was a partner at Jersey Fortress Capital Partners, a boutique investment banking firm, manager of internal audits at Claire's Stores, and a senior financial reporting analyst with SimplexGrinnell.

Bonnie Tomei was named CFO at Spectra7 Microsystems Inc., an analog semiconductor company. Dave Mier, who has been serving as interim CFO, is retiring. Tomei brings 15 years of finance experience from several semiconductor companies, including Achronix, Aquantia, and Techwell.


“It’s just a perfect storm of high demand and low supply. And it should pass. Unless we think there's going to be a multi-year shortage of used cars in the United States, we should look at [high inflation] as temporary.”

—Federal Reserve Chairman Jerome Powell said in testimony given to the House Financial Services Committee, as reported by Yahoo Finance

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