Washington, D.C. (April 2, 2020) – Before the coronavirus outbreak, the small business labor market remained steady in March with strong hiring, additional open positions, and historically high employee compensation, according to NFIB’s monthly jobs report. Most survey responses were collected prior to the increase in jobless claims the week of March 21. An indication of that showed up in hiring plans which dropped significantly from February, a strong signal of what’s to come in future months.
“The impact from the coronavirus will have a lasting effect on the small business economy,” said NFIB Chief Economist Bill Dunkelberg. “Labor shortages continued throughout the first half of March, but with the updated number of jobless claims, the small business labor situation has been altered. The severity and duration of the coronavirus outbreak and the mobility of regulations imposed will determine owners’ ability to remain operational.”
In the March report, small business owners reported average additions of 0.37 workers per firm, adding to a robust first quarter of 2020. Finding qualified workers remains the top issue for owners, with 24% reporting this as their number one problem.
Down from February, 44% reported hiring or trying to hire, but 87% of those reported few or no qualified applicants. Sixty-five percent of construction firms reported few or no qualified applicants and 46% cited the shortage of qualified labor as their top business problem. Comparable figures for manufacturing were 49% and 32% respectively.
Seasonally adjusted, 35% of all owners reported job openings they could not fill in the current period and 56% of owners had job openings in construction. Down 12 points from February, a net 9% (seasonally adjusted) plan to create new jobs. Not seasonally adjusted, 23% plan to increase total employment at their firm and 6% plan reductions.
Thirty percent of owners reported job openings for skilled workers (down 3 points) and 13% have openings for unskilled labor (up 2 points). The NFIB data reveals the unevenness of the virus’s impact on the real economy and jobs in particular.
Owners continued to plan to raise worker compensation, with a seasonally adjusted net 31% reported raising compensation and a net 16% reported they plan to do so in the coming months. Seven percent cited labor costs as their top business problem. Whether or not the compensation increases will be supported by sales revenue is in doubt, increasing the importance of the various loan programs made available.
