The shortage of qualified workers reached a record high in December, and the number of small business owners who made plans to raise compensation was the second highest in history, according to the monthly National Federation of Independent Business (NFIB) Jobs Report, released today.
“We’ve been watching this problem build for the last 12 months, but it seems to have reached a critical point in December,” said NFIB President and CEO Juanita Duggan. “Small business owners are converting their optimism into action, and a majority cannot find enough workers to meet higher customer demand.”
State-specific data is unavailable, but NFIB State Director Jim Brown said small-business owners across Tennessee are clearly concerned about finding enough qualified workers. Eighty-eight percent of NFIB members responding to a recent survey believe Tennessee “should do more to provide vocational and technology training for high school students who are not college-bound,” while seven percent oppose and four percent are undecided.
“Tennessee is doing better than a lot of states, but success presents its own challenges,” Brown said. “We’ll be working with the executive and legislative branches and other business groups to ensure that Tennessee meets the unique workforce needs that various industries have in our communities.”
Nationwide, the number of job openings remained steady in December while plans to hire fell four points to 20 percent. That modest decline could indicate that small business owners are becoming more frustrated by the shortage of qualified workers.
“Finding qualified workers is now the second biggest concern for small business owners,” said NFIB Chief Economist Bill Dunkelberg. “Taxes occupied the top spot all of last year, but that may drop as the recently enacted tax reform law takes effect. The worker shortage could very well become the number-one problem for small businesses.”
Fifty-four percent of small business owners last month reported finding few or no qualified workers. That’s a 10-point jump from the previous month and an all-time record. The previous record (53 percent) was September of 1999. Meanwhile, the number of firms planning to raise compensation jumped six points to 23 percent, the second-highest reading in history. It’s the highest reading since March of 2000 (also 23 percent) and just shy of the record of 27 percent, set in December of 1989.
“They have to raise compensation to attract and keep qualified employees,” said Dunkelberg. “That means their costs will increase. It remains to be seen whether that will lead to higher prices.”
The labor shortage is a problem for small business owners, but it is also a strong signal that the economy is gaining momentum.
“Qualified workers are in strong demand. That’s good for workers and good for families,” said Duggan. “Finding qualified workers is a challenge that small business owners will be working through over the next few months. The positive is that small-business owners are more confident in the economy, and workers will be the beneficiaries.”