Report: Small business owners raise wages as tight labor market continues

Written on Apr 19, 2018

The monthly Jobs Report, released April 5, shows small business owners reported historically high job creation plans, rising two points to a net 20%. At the same time, the number of small business owners raising compensation reached its highest reading since November 2000 at a net 33% in response to the tight labor market.

“Small businesses are telling us that they’re optimistic, hiring, and willing to raise wages to find the right employees for their businesses,” said NFIB President and CEO Juanita Duggan.

Small business owners reported a seasonally-adjusted average employment change per firm of 0.36 workers, one of the best readings in survey history. A seasonal-adjusted 14% of owners said they are increasing employment by an average of 2.8 workers per firm.

“It’s a positive sign that we’re seeing small business owners creating new jobs at historic levels,” said NFIB Chief Economist Bill Dunkelberg. “Aside from the past four months, you’d have to go back to 1999 to see 20% or above on job creation plans.”

Businesses hiring or trying to hire rose one point to 53%, but 47% reported few or no qualified workers. In addition, 21% of owners cited difficulty finding qualified workers as their Single Most Important Business Problem, down one point from February. Thirty-five percent of all owners reported job openings they could not fill in the current period, up one point, tying July and October 2017 for the highest reading since November 2000.

Professional service firms were most affected with 35% of owners saying labor quality is their top problem. Thirty percent plan to increase total employment, up three points, and two percent plan reductions, down one point. Hiring plans were the strongest in construction, manufacturing, and wholesale trades.

In February, the jobs report saw a significant jump of owners who reported using temporary workers. That number went down five points to 10%, which indicates that many of these workers got permanent positions.

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