Small businesses in the US continue to struggle with both an uncertain economy and stalled growth strategies. While inflation remains the major concern, finding workers to fuel potential growth is beginning to become a long term challenge. Many small companies are poised to grow and expand but simply are unable to find the needed workers that will allow that to happen. In a recent report on job growth released by the National Federation of Independent Businesses, it becomes clearer as to why growth may be stumbling a bit. The following is taken directly from that report:
According to NFIB’s monthly jobs report, 57% of owners reported hiring or trying to hire in January, up two points. Of those hiring or trying to hire, 91% of owners reported few or no qualified applicants for the positions they were trying to fill. Twenty-seven percent of owners reported few qualified applicants for their open positions and 25% reported none.
“The labor shortage continues to be a major concern for small businesses in the New Year as nearly all owners trying to hire are reporting no or few qualified applicants,” said NFIB Chief Economist Bill Dunkelberg. “Small businesses’ sales opportunities are limited because of the staffing shortage but owners continue to make changes in business operations to compensate.”
Forty-five percent (seasonally adjusted) of all owners reported job openings they could not fill in the current period, up four points from December.
Small business owners’ plans to fill open positions remain elevated, with a seasonally adjusted net 19% planning to create new jobs in the next three months, up two points from December but 13 points below its record-high reading of 32 reached in August 2021.
The percent of owners reporting labor quality as their top business operating problem remains elevated at 24%. Labor costs reported as the single most important problem to business owners increased two points to 10%, historically among the highest readings in over 49 years.
Seasonally adjusted, a net 46% of owners reported raising compensation, up two points from December and just four points below the 49-year average record high set in January last year. A net 22% of owners plan to raise compensation in the next three months, down five points from December. This is a major concern of the Federal Reserve, as these increased costs are likely to be passed on in higher selling prices.
Thirty-six percent of owners have job openings for skilled workers and 17% have openings for unskilled labor.
-Written by Kevin Sawyer