NFIB Jobs Report: Small Businesses Increasing Compensation Eases inJune

JEFFERSON CITY (July 6, 2023) – Seasonally adjusted, a net 36% of owners reported raising compensation in June, down five points from May and the lowest since May 2021. A net 22% of owners plan to raise compensation in the next three months, according to NFIB’s monthly jobs report.

“The labor force participation rate remains below pre-COVID levels, which is contributing to the tight labor market seen on Main Street,” said NFIB Chief Economist Bill Dunkelberg. “With labor demand remaining strong, owners will have to continue raising compensation to compete and fill their open positions, although that pressure is easing a bit.”

Although state-specific data is unavailable, NFIB State Director Brad Jones said:

“The challenge of filling open positions is at the heart of the inflation issue. Without qualified applicants, small businesses struggle to expand their operations and compete. While the pressure on prices is beginning to ease, relief can’t come fast enough for our local job creators.”

Forty-two percent of owners (seasonally adjusted) reported job openings they could not fill in the current period, down two points from May. The share of owners with unfilled job openings far exceeds the 49-year historical average of 23% although it is nine percentage points lower than the record high of 51% last reached in May 2022.

The percent of small business owners reporting labor quality as their top small business operating problem remains elevated at 24%, unchanged from last month. Labor costs reported as the single most important problem to business owners decreased two points to 8% in June, five points below the highest reading of 13% reached in December 2021.

Small business owners’ plans to fill open positions remain elevated, with a seasonally adjusted net 15% planning to create new jobs in the next three months, down four points from May and 17 points below its record high reading of 32 reached in August 2021.

Overall, 59% of owners reported hiring or trying to hire in June, down four points from May. Of those hiring or trying to hire, 92% of owners reported few or no qualified applicants for the positions they were trying to fill. Thirty-three percent of owners reported few qualified applicants for their open positions and 21% reported none.

Thirty-five percent of owners have job openings for skilled workers and 18% have openings for unskilled labor.