Small Business Labor Market Makes Improvement in August

A seasonally adjusted net 21% of small businesses plan to create new jobs in the next three months, according to NFIB’s monthly jobs report. This is up 3 points from July and 20 points above April’s reading, an unprecedented recovery.

“The small business labor market is recovering and moving in the right direction,” said NFIB Chief Economist Bill Dunkelberg. “Small businesses are planning to hire more workers, keep employees on the payroll, and their customers happy. However, there is still uncertainty and many small businesses are counting on additional financial assistance.”

Job growth in the construction industry continues to be strong but owners are having a particularly hard time finding skilled employees. The service sector remains the missing link and is the key to stronger growth going forward.

Thirty-three percent (seasonally adjusted) of owners reported job openings they could not fill in the current period, up 3 points. Thirty-one percent of owners have job openings for skilled workers and 12% have job openings for unskilled labor. Twenty-six percent of owners reported few or no qualified applicants for their open positions and 20% reported none.

Up from July, 52% of owners reported hiring or trying to hire in August, and 88% of those reported few or no qualified applicants for the positions they were trying to fill. In construction, 50% of firms reported few or no qualified applicants and 41% cited the shortage of qualified labor as their top business problem.

A net 18% (seasonally adjusted) of owners reported raising compensation, up 3 points from July. A net 14% of owners plan to raise compensation in the coming months. Nine percent of owners cited labor cost as their top problem. With no additional federal aid, wage growth will be the only source of income growth for consumers.

Eight percent reported increasing employment an average of 4.5 workers per firm and 20% reported reducing employment an average of 2.3 workers per firm (seasonally adjusted).