NFIB has introduced a new Small Business Employment Index in its January Jobs Report. The index combines actual and planned changes in employment and employee compensation to provide a single measure of the small business labor market. According to NFIB, a higher index indicates a tighter labor market, while a lower index signals a weaker one.
Chief Economist Bill Dunkelberg stated, “Main Street continues to search for qualified workers for open positions. Owners reported increased wages over the last three months, alongside plans to increase them in the next three months as well.”
In January, the Employment Index dropped by nearly one point to 101.6, reversing about half of December’s gain when it reached its highest level since March 2025. Despite this decrease, the index remains above its historical average of 100 and slightly above the 2025 average of 101.2.
The report shows that 31% of small business owners (seasonally adjusted) had job openings they could not fill in January, down two points from December but still above the historical average of 24%. Openings for skilled workers fell by three points to 25%, while openings for unskilled labor remained unchanged at 10%.
A net 16% of owners plan to create new jobs in the next three months, which is down one point from December.
Hiring activity also slowed. Half of all owners reported hiring or trying to hire in January—a decrease of three points from December and the lowest reading since May 2020. Of those hiring or attempting to hire, 44% (88% of those hiring) said there were few or no qualified applicants for their positions, which is four points lower than last month. Specifically, 25% reported few qualified applicants (unchanged), and 19% said there were none (down four points).
Labor quality as the most significant problem for small businesses declined for the third consecutive month: In January, only 16% cited it as their top issue—three points lower than in December. This concern was most pronounced in construction (30%), manufacturing, and professional services sectors; it was least common in wholesale and finance industries.
Labor costs remained steady as the most important problem at 9%.
Compensation trends showed that a seasonally adjusted net 32% of owners raised wages in January—one point higher than December—while a net 22% plan wage increases over the next three months (down two points).
For more details on these findings, readers can view the entire NFIB Jobs Report.
