Small Businesses Continue to Struggle with Labor Shortages and Inflation

Date: February 15, 2023

NFIB Reports Show Modest Increase in Optimism

NFIB’s monthly Jobs report shows that small businesses continued to struggle to increase their workforce in January, with 57% of owners reporting hiring or trying to hire in January – and almost all of those owners reporting few or no qualified applicants for their open positions. Meanwhile, the monthly Small Business Economic Trends report saw the NFIB Small Business Optimism Index increase 0.5 points to 90.3, remaining below the 49-year average of 98 points.  

NFIB’s January 2023 Jobs Report noted that 91% of small business owners who were hiring or trying to hire reported few or no qualified applicants. Forty-five percent of all owners reported job openings they could not fill in the current period, up four points from last month. A net 19% of small business owners also plan to create new jobs in the next three months, a two-point increase from December but a steep 13-point decrease from the record-high reading from August 2021. 

“The labor shortage continues to be a major concern for small businesses in the New Year as nearly all owners trying to hire are reporting no or few qualified applicants,” said NFIB Chief Economist Bill Dunkelberg. “Small businesses’ sales opportunities are limited because of the staffing shortage but owners continue to make changes in business operations to compensate.” 

The January Small Bu siness Economic Trends report noted that 26% of small business owners reported that inflation was their single most important problem, a six-point decrease from December but still historically high. Small business owners expecting better business conditions over the next six months also improved by six points, to a net negative 45%. The net percent of owners raising average selling prices decreased one point to a net 42%. 

The net percent of owners who expect sales to improve dropped four points from December to a net negative 14%. While the net percent of owners reporting higher nominal sales over the past three months compared to the prior three months recently improved by four points since December, it still remains low at a net negative 4%. 

Employers continue to raise compensation to entice new employees. A net 46% of owners reported raising compensation, and a net 22% plan to raise compensation in the next three months, a five-point decrease from December.  

Up four points from December, 59% of owners reported capital outlays in the last six months. The most common purchase was new equipment, followed by acquiring vehicles & improving or expanding facilities. In addition, 21% of owners plan capital outlays in the coming months. 

Read the complete January 2023 Jobs Report here, and the complete Small Business Economic Trends report here. 

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