Labor quality continues to be a challenge for small businesses in the latest National Federation of Independent Business (NFIB) monthly jobs report.
Twenty-one percent of respondents reported labor quality as their top small business operating problem, up one point from December. Meanwhile, 10 percent of business owners cited labor costs as their top challenge, three points down from the month before.
“Although consumer spending remains strong, small business owners cannot find enough workers to fill their open positions,” NFIB Chief Economist Bill Dunkelberg said. “Owners continue to raise compensation to retain and attract workers with the skills and willingness to do the job, but hiring remains a struggle in the tight labor market.”
While those struggles persist, there does seem to be some improvement. Only 39 percent of small business owners said they have job openings they could not fill in January, down one point from December and the lowest reading since January 2021. The pace of hiring appears steady, with 55 percent of owners reporting that they hired or tried to hire in January, the same level as December.
The high demand for workers continues to raise labor costs. Seasonally adjusted, 39 percent of respondents said they raised compensation in January, a 3 percent increase from the month before and the highest reading since May 2023.
The full NFIB jobs report is available here.