Small Business Owners Face Labor Shortages as Job Openings Decrease to Pre-Pandemic Levels

According to the monthly jobs report prepared by the National Federation of Independent Business (NFIB), small business owners are facing labor shortages as job openings among them decreased in February to pre-pandemic levels. Employment activity has lessened somewhat as it becomes easier for owners to find qualified workers, but labor demand remains strong.

Labor costs reported as the single most important problem for business owners increased one point to 11%, only two points below the highest reading of 13% reached in December 2021. Overall, 56% of owners reported hiring or trying to hire in February, up one point from January. Of those hiring or trying to hire, 91% reported few or no qualified applicants for the positions they were trying to fill, up two points from January.

Seasonally adjusted, a net 35% reported raising compensation, down four points from January and the lowest reading since May 2021. A net 19% plan to raise compensation in the next three months, down seven points from January and the lowest since March 2021. The report also mentions that 32% have openings for skilled workers, an increase of two points, and 12% have openings for unskilled labor, a decrease of three points.

In terms of job openings in different sectors, the construction sector saw a six-point increase from last month, with over half of businesses in that sector having a job opening they can’t fill. Job openings were highest in the construction, transportation, and wholesale sectors