“While small businesses are not hiring extensively, they continue to face difficulties related to labor cost and quality,” said Chief Economist Bill Dunkelberg. “Despite the current stagnant employment growth, economic conditions could change rapidly.”

A seasonally adjusted net 12% of owners plan to create new jobs in the next three months, unchanged from February and close to the average of net 11%.

Overall, 52% of owners reported hiring or trying to hire in March, down 2 points from February. Forty-five percent of owners (87% of those hiring or trying to hire) reported few or no qualified applicants for the positions they were trying to fill (down 1 point). Twenty-two percent reported few qualified applicants (down 3 points), and 23% reported none (up 2 points).

In March, 15% of small business owners cited labor quality as their single most important problem, unchanged from February and above the historical average of 12%. The last time labor quality reported as the single most important problem was below 15% was in December 2016. While labor quality has declined over the past few months, reports of labor costs as the single most important problem have gradually increased. Ten percent of business owners reported labor costs as their single most important problem, up 1 point from February.

Seasonally adjusted, a net 33% of small business owners reported raising compensation in March, down 1 point from February. A net 18% (seasonally adjusted) plan to raise compensation in the next three months, down 4 points from February and the lowest reading since July 2025. Despite these declines, planned and actual labor compensation levels remain above their historical averages.