U.S. Small Businesses Face Hiring Challenges as Inflation Persists
12 Mar 2024
12 Mar 2024 by Luke Puplett - Founder
The National Federation of Independent Business (NFIB) Small Business Optimism Index for February 2024 revealed that small business owners are grappling with labor challenges and high inflation, despite some signs of easing pressures.
On the hiring front, the report paints a bleak picture. A net 12% of small business owners plan to create new jobs in the next three months, the lowest level since May 2020. Additionally, 37% of owners reported job openings they could not fill, with the construction, transportation, and wholesale sectors facing acute difficulties in finding skilled workers.
The labor quality issue remains a significant concern, with 16% of owners citing it as their single most important business problem, though this figure has decreased from the previous month. Simultaneously, 11% of owners cited labor costs as their top challenge, inching closer to the highest reading of 13% reached in December 2021.
Compensation levels are also under pressure, with a net 35% of owners reporting raising compensation, the lowest reading since May 2021. However, a net 19% plan to raise compensation in the next three months, the lowest since March 2021.
Inflation continues to be a thorn in the side of small businesses, with 23% of owners reporting it as their single most important problem, up three points from the previous month. A net 21% of owners raised average selling prices, the lowest since January 2021, but a net 30% plan price hikes in the coming months.
While the labor market has eased slightly, with owners reporting an easier time attracting and retaining employees, the combination of persistent inflation and labor challenges is testing the resilience of small businesses.
Read the full NFIB report here.
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