Labor Quality Remains Top Concern for Small Business Owners

Forty percent of owners have job openings they could not fill

inbusinessPHX.com

The percent of small business owners reporting labor quality as their top small business operating problem remains elevated at 20%, according to NFIB’s monthly jobs report. Labor costs reported as the single most important problem for business owners increased one point to 9%, four points below the highest reading of 13% reached in December 2021.

“The tight labor market has been a consistent concern for small business owners throughout 2023,” said NFIB Chief Economist Bill Dunkelberg. “The level of job openings suggests a solid labor market will continue on Main Street for 2024, as owners raise compensation to attract qualified workers and consumers spend.”

Forty percent (seasonally adjusted) of all owners reported job openings they could not fill in the current period, unchanged from November. Owners’ plans to fill open positions remain elevated, with a seasonally adjusted net 16% planning to create new jobs in the next three months, down two points from November and 16 points below its record high reading of 32 reached in August 2021.

Overall, 55% of owners reported hiring or trying to hire in December, up one point from November. Of those hiring or trying to hire, 89% of owners reported few or no qualified applicants for the positions they were trying to fill. Twenty-eight percent of owners reported few qualified applicants for their open positions and 21% reported none.

Seasonally adjusted, a net 36% of owners reported raising compensation, unchanged for the fifth consecutive month. A net 29% of owners plan to raise compensation in the next three months, down one point from November.

Job openings in the construction industry were up nine points from last month and over half have a job opening they can’t fill. Job openings were the highest in the construction and transportation sectors and the lowest in the agriculture and finance sectors.

Thirty-three percent of owners have job openings for skilled workers and 14% have openings for unskilled labor. The manufacturing and construction sector growth is held back by a lack of skilled labor.