Labor Quality and Costs Remain Top Business Problems for Many as Owners Struggle to Increase Workforce

NFIB

Small businesses continued to struggle to increase their workforce in February, with 22% of owners reporting that labor quality was their top business problem, according to NFIB’s monthly jobs report. Eleven percent of owners cited labor costs as their top business problem, unchanged from January. Reports of labor costs as the top business problem are at 48-year record high levels, only two points below the December 2021 record.

“Throughout the country, the number of job openings continues to exceed the number of unemployed workers which has produced a tight labor market, especially on Main Street,” said Bill Dunkelberg, NFIB Chief Economist. “Small business owners are working hard to recruit and retain employees to get back to a full and productive workforce.”

Seasonally adjusted, 48% of all owners reported job openings they could not fill in the current period, up one point from last month. The number of unfilled job openings exceeds the 48-year historical average of 23%.

Small business owners’ plans to fill open positions remain high, with a seasonally adjusted net 19% planning to create new jobs in the next three months.

Overall, 61% of all employers reported hiring or trying to hire in February, up two points from January’s report. Ninety-three percent of those owners hiring or trying to hire reported few or no qualified applicants for the positions they were trying to fill. Thirty-one percent of owners reported few qualified applicants for their open positions and 26% reported none.

Also seasonally adjusted, a net 45% of owners reported raising compensation, down five points from January’s 48-year record high reading. A net 26% of owners plan to raise compensation in the next three months.

Up one point from January, 37% of owners have openings for skilled workers and 25% of owners have openings for unskilled labor, up three points. Fifty-eight percent of the job openings in the construction industry are for skilled workers. Sixty-seven percent of construction firms reported few or no qualified applicants, displaying one of the tightest domestic labor markets.

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