According to NFIB’s monthly jobs report, fewer small business owners are planning to raise compensation in the next three months. The report shows that a net 18% of owners, seasonally adjusted, intend to increase compensation, which is down three points from last month and the lowest reading since March 2021. Despite this decrease, a net 37% of owners reported raising compensation in May, although this is also down one point from April.
NFIB Chief Economist Bill Dunkelberg noted that many small businesses are still struggling to fill open positions, even though plans to increase compensation have declined. The report also shows that labor costs are no longer the top concern for business owners, having decreased slightly to 10%. However, the percentage of owners reporting labor quality as their main operating problem has increased slightly to 20%, indicating ongoing challenges in attracting and retaining skilled workers.
In May, 42% of small business owners reported job openings that they could not fill, which is up two points from April. A net 15% of owners plan to create new jobs in the next three months, the highest reading of the year. Overall, 60% of owners reported hiring or trying to hire in May, with 51% experiencing difficulty in finding qualified applicants for open positions.
The report also highlights the tight labor market in sectors such as construction, manufacturing, and transportation, where over half of job openings remain unfilled. The construction sector, in particular, had the highest number of job openings in May, while the wholesale and agriculture sectors had the lowest.
In conclusion, the NFIB’s jobs report paints a picture of ongoing challenges for small businesses in finding and retaining skilled workers. Despite efforts to increase compensation and create new jobs, many owners are still struggling to fill open positions in various sectors of the economy.