Inflation and Labor Quality Also Remain Top Problems
NFIB’s monthly Jobs report shows that small businesses planning to add new positions remains elevated, with a net 17% planning to create new jobs in the next three months, down one point from a month earlier. Overall, the monthly Small Business Economic Trends (SBET) report saw the NFIB Small Business Optimism Index decline 2.1 points in December to 89.8, the 12th consecutive month below the 49-year historical average of 98.
“Small business owners remain frustrated with the current labor situation,” said NFIB Chief Economist Bill Dunkelberg. “The trend in planned hiring eased slightly as labor quality and labor cost are two top issues for owners. Owners raised compensation again in December to attract and retain employees.”
NFIB’s December 2022 Jobs Report noted that 55% of small business owners reported hiring or trying to hire in December, four points down from November. Finding qualified applicants remains a major challenge, and among those hiring or trying to hire, 93% reported few or no qualified applicants.
Forty-one percent of small business owners reported job openings they couldn’t fill, a three-point decrease from November. While this is substantially higher than the 49-year historical average of 23%, it is also a significant decline from the record-high reading of 51% from July 2021.
The number of unfilled job openings is more than double the 48-year historical average of 23%. A net 19% of small business owners also plan to create new jobs in the next three months.
Small business owners expecting better business conditions dropped significantly by eight points to a net negative 51%. Some of their top business problems include the following.
- Inflation remains the single most cited small business problem at 32%.
- The second-most cited problem is labor quality, up two points from last month to 23%.
- Labor costs also remain a commonly cited top problem at 8%, one point down from November. Small business owners continue to try to attract new employees with higher pay: a net 44% report raising compensation in December, four points up from November.
When it comes to prices, the net percent of small business owners raising average selling prices decreased eight points to a net 43%, historically elevated but the lowest level since May 2021. In addition, a net 24% of owners plan price hikes in the near future, down 10 points from November.
Take Action: If you own a small business and have concerns about new IRS funding set out in last year’s Inflation Reduction Act, send a message to your lawmakers in Congress.