According to the National Federation of Independent Business (NFIB) monthly jobs report, a net 18% of small business owners plan to raise compensation in the next three months as of May, marking a decrease of three points from the previous month and reaching the lowest level since March 2021. Seasonally adjusted, a net 37% of owners reported raising compensation, down one point from April but still historically high.
"An exceptionally high number of small businesses are still struggling to fill open positions," said NFIB Chief Economist Bill Dunkelberg. "Although plans to increase compensation have fallen, small firms continue in their efforts to attract and retain workers."
Labor costs reported as the single most important problem for business owners decreased by one point to 10%, which is three points below the highest reading of 13% reached in December 2021. The percentage of small business owners citing labor quality as their top operating problem rose by one point from April to 20%. However, concerns over labor quality have eased considerably over the last two quarters.
In May, 42% (seasonally adjusted) of small business owners reported job openings they could not fill, an increase of two points from April. A seasonally adjusted net 15% of owners plan to create new jobs in the next three months, up three points from April and representing the highest reading this year.
Overall, 60% of small business owners reported hiring or attempting to hire in May, up four points from April. Among those hiring or trying to hire, 51% (85%) reported few or no qualified applicants for their positions. Specifically, 29% reported few qualified applicants while 22% reported none.
Thirty-seven percent have openings for skilled workers and 14% have openings for unskilled labor. The labor market remains tight, particularly in construction, manufacturing, and transportation sectors.
Job openings in construction were down one point from April with over half (54%) reporting unfilled positions. Job openings were highest in construction, manufacturing, and transportation sectors and lowest in wholesale and agriculture sectors.
View the full jobs report here.
