The National Federation of Independent Business has issued its new monthly jobs report and one of the key findings is how high labor quality remains as a concern for small business. More than 20 percent of small business report labor quality as their top operating problem, another sign of the bizarre labor and employment situation post-pandemic.
“The small business economy is recovering, but owners continue to face ongoing labor troubles throughout the country,” said NFIB Chief Economist Bill Dunkelberg. “Employment plans remain historically strong with 18% of owners planning to hire and create new jobs in the coming months, historically high but the lowest reading since February 2021.”
Almost half of the small business owners that responded – 44 percent – report having job openings they are unable to fill. This is down from October but only two points, though November is the lower level for this point since April of 2021. In the 49-year history of the NFIB survey, the average number for that statistic is 23 percent.
“Georgia’s unemployment rate was only 2.9% in October, but that makes it hard for small businesses and other employers to find people to work,” Loggins said. “Our hope is that programs such as the registered apprenticeships announced last month by Governor Kemp and the Technical College System of Georgia can help prepare more people to fill the positions that are available.”
Demand for labor across the board remains high, with nearly 60 percent of owners hiring or trying to hire in November, with 37 percent having openings for skilled workers and 16 percent for unskilled. This is where it gets bizarre – 92 percent of those hiring or trying to hire report few or no qualified applicants for the positions they are trying to fill. So, although the number that label it their top concern is only at 20 percent, the number of small businesses that are struggling with hiring approaches all of them.
To address this issue, many businesses are raising wages, with 40 percent reporting doing so in October. A further 28 percent plan to increase wages in the next quarter.
All of this indicates still solid demand in the economy, with businesses wanting to hire but many unable to do so. Overall, only 11 percent reported employment gains in recent months, with a worrying 15 percent reporting declines. This report is limited to small business so it does not necessarily give a full picture of the state of the economy but as nearly half of all employees in the U.S. work for a small business it is a pretty good indicator and does match up with much of the discussion of the broader economy.
With inflation coming down a bit but the economy still absorbing a couple years worth of decades-level highs, as employment rates continue at historic lows, we have left the economic textbooks and are in unprecedented times. Next year’s economy should be interesting.
