Small Businesses Struggle to Fill Job Openings as Labor Market Remains Tight

As per the latest NFIB jobs report, the labor market remains tight with an increase in unfilled job openings. In April, 40% of small business owners reported job openings they could not fill, which is a three-point increase from March and the highest percentage since January 2021. This trend has been consistent with labor costs being the top operational problem for 11% of owners, only two points below the highest reading in December 2021.

Despite plans to create new jobs in the next three months, small businesses are not reporting net gains in employment due to wage pressures and inflation keeping the labor market tight. NFIB Chief Economist Bill Dunkelberg stated that hiring plans among small businesses increased in April, but open positions remain largely unfilled as owners struggle to find employees.

Labor quality was reported as the most important problem for business owners, with a one-point increase to 19%. However, this top problem has eased over the last two quarters. In April, 56% of owners reported hiring or trying to hire, with 91% reporting few or no qualified applicants for the positions. A net 38% reported raising compensation, with 21% planning to raise compensation in the next three months.

Job openings were highest in the transportation, construction, and wholesale sectors, with construction job openings up 11 points from the previous month. In contrast, job openings were lowest in the agriculture and finance sectors. Despite efforts to hire and raise compensation