Small businesses started 2020 on a strong note, adding an average employment change per firm of 0.49 workers, the highest level since March 2019, according to NFIB’s monthly jobs report. The small business labor market overall is starting on a good note, with strong hiring and higher employee compensation.
A historically high percentage of owners are planning to raise their employee compensation to fill their open positions. A net 36% (seasonally adjusted) reported raising compensation, up seven points from December. A net 24% (seasonally adjusted) plan to do so in the coming months.
“Small businesses are keeping the strong economic momentum going in the New Year,” said NFIB’s Chief Economist Bill Dunkelberg. “They are adding jobs and raising compensation. With the help of tax and regulatory relief, the small business economy is a strong force.”
Up from December, 13% of owners reported increasing employment an average of 2.8 workers per firm and 4% reported reducing employment an average of 2.8 workers per firm.
Continuing from last year, small businesses’ biggest problem is finding qualified workers for their open positions. Twenty-six percent of owners reported it as their No. 1 problem, one point below the August 2019 record high. Sixty-two percent of construction firms reported few or no qualified applicants and 42% cited the shortage of qualified labor as their top business problem. Comparable figures for manufacturing were 52% and 34% respectively.
A seasonally adjusted 37% of owners reported job openings they could not fill in the current period, up four points from December. Fifty percent had job openings in construction, an indication that the inability to assemble teams is a contributor to the lackluster performance of the industry.
A net 19% (seasonally adjusted) plan to create new jobs at their business. Twenty-four percent plan to increase total employment at their firm, up five points, and 3% plan reductions, down two points. In the construction industry, 34% plan to increase employment and 4% plan reductions.
Thirty percent of owners have openings for skilled workers and 14% have openings for unskilled labor. However, 29% reported few qualified applicants for their open positions and 20% reported none. Reports of “few or no qualified applicants” were high in construction (62%), manufacturing (52%), and retail (52%).
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