Relief for Labor Costs
The latest jobs report from the National Federation of Independent Business (NFIB) paints a more optimistic picture for small businesses as they navigate labor costs and hiring pressures.
December saw a decrease in labor expenses, suggesting a gradual softening within the job market.
Unfilled Job Openings: In December, 35% of small business owners reported having job openings that remain vacant—a slight decrease of one percentage point from November’s figures.
Hiring Efforts: Approximately 55% of small firms are either hiring or actively seeking candidates, a number that holds steady.
However, nearly half, or 49%, highlighted obstacles stemming from a lack of qualified applicants, reflecting a slight uptick from the previous month.
Sector-Specific Insights
When we examine particular sectors, the transportation industry stands out with the highest number of unfilled positions, reaching 61%.
Following closely are construction at 41% and manufacturing at 38%.
Conversely, agriculture and finance report the lowest rates of unfilled job openings at 22% and 19%, respectively.
Bill Dunkelberg, NFIB’s Chief Economist, emphasizes that the scarcity of suitably qualified workers remains a significant barrier to job growth within small businesses.
While wage increases have moderated, they’ve managed to stabilize as the year draws to a close.
The report also outlines a notable slowdown in wage growth among small enterprises:
- Current Wage Trends: In December, a net of 29% of business owners said they raised wages—a decline of three percentage points from November and the lowest level seen since March 2021.
- Planned Wage Increases: Looking ahead, 24% of owners indicated they plan to increase wages in the near future, a drop of four points from November’s peak.
Positive Outlook for Hiring
Despite recognizing labor costs as a factor, only 11% of small business owners consider it their most pressing concern.
Particularly concerning is the construction sector, which has seen a marked decline in job openings, dropping 13 points from November and 17 points year-over-year.
The transportation and manufacturing sectors share similar challenges in attracting skilled labor.
The survey also noted that 28% of respondents reported having trouble finding qualified applicants, while 21% stated they received no applications at all—an increase of two percentage points from the prior month.
Hiring Outlook: Optimistically, a net 19% of small business owners expect to create new jobs within the next three months—an improvement of one point from November and the most positive outlook since May 2023.
Economic Perspective: The broader economic climate remains stable, supported by solid consumer spending alongside government investment in education, healthcare, and social services.
According to the U.S. Bureau of Labor Statistics, the economy added 227,000 jobs in November, with an annual wage increase of 4%.
While pressures related to wages appear to be easing, small business owners still struggle to find qualified talent.
In fact, 19% of survey participants identified the quality of labor as their top operational challenge, remaining consistent since November.
As 2025 approaches, small business owners express a cautious optimism about potential policy changes, keeping an eye on upcoming legislative and administrative developments that could impact their operations.
This NFIB Jobs Report provides valuable insights into the employment landscape affecting local businesses, drawing on feedback from 513 small business owners.
As the year closes, these dynamics shed light on the ongoing challenges and opportunities faced by small enterprises.
Source: Smallbiztrends.com