Historic Number of Small Business Owners Raising Compensation in January

A historic number of small businesses are struggling to increase their workforce, according to National Federation of Independent Business’s (NFIB’s) monthly jobs report. A net 50 percent (seasonally adjusted) of small business owners reported raising compensation, up two points from December and a 48-year record high reading. A net 27 percent plan to raise compensation in the next three months, down five points from December.

“Small business owners are managing the reality that the number of job openings exceeds the number of unemployed workers, producing a tight labor market and adding pressure on wage levels,” says NFIB chief economist Bill Dunkelberg. “Reports of owners raising compensation continues at record-high levels to attract applicants to their open positions.”

Twenty-three percent of owners said that labor quality was their top business problem, down two points from December. Eleven percent of owners cited labor costs as their top business problem. Reports of labor costs as the top business problem are at 48-year record high levels, just two points below December’s record-breaking 13 percent.

Forty-seven percent of owners (seasonally adjusted) reported job openings they could not fill in the current period, down two points from December. The number of unfilled job openings still far exceeds the 48-year historical average of 23 percent.

Small business owners’ plans to fill open positions remain at record high levels, with a seasonally adjusted net 26 percent planning to create new jobs in the next three months, down two points from December but only six points below the highest reading in the 48-year history of the survey set in August 2021.

Overall, 59 percent of small employers reported hiring or trying to hire in January, down one point from December. Ninety-three percent of those hiring or trying to hire reported few or no qualified applicants for the positions they were trying to fill. Twenty-nine percent of owners reported few qualified applicants for their open positions and 26 percent reported none.

Thirty-six percent of owners have openings for skilled workers and 22 percent have openings for unskilled labor. Forty-four percent of the job openings in construction are for skilled workers. Sixty-four percent of construction firms reported few or no qualified applicants, one of the tightest domestic labor markets.

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