Small businesses are grappling with ongoing hiring difficulties, particularly in the construction and transportation sectors.
According to a January report from the NFIB, an alarming 35% of small business owners reported unfilled job vacancies, a figure unchanged since December.
Industry-Specific Challenges
Among various industries, transportation, construction, and manufacturing sectors showed the most pronounced demand for workers, whereas agriculture and finance lagged behind with fewer openings.
Specifically, the construction industry saw a slight uptick in vacancies, increasing by four points since December, though it remains two points lower compared to January 2024.
The NFIB’s Chief Economist noted a general sense of optimism among small business owners regarding the economy’s future.
However, he acknowledged that the struggle to find qualified employees remains a major concern for many business operators.
Hiring Trends and Obstacles
In January, 52% of small business owners either hired new staff or planned to do so, a decline of three points from the previous month.
Among those actively looking to hire or considering it, a staggering 47% reported encountering obstacles due to a shortage of qualified candidates.
The specifics of their struggles included:
- 24% encountered few qualified applicants,
- 23% faced the issue of no qualified candidates at all.
There’s a marked demand for skilled labor, with nearly 29% of businesses highlighting vacancies for skilled positions, similar to the previous month’s findings.
In contrast, the demand for unskilled labor saw a decrease of three points, dropping to 10%.
Wage Adjustments and Future Outlook
Despite these hiring hurdles, 18% of business owners anticipate creating new positions within the next three months, albeit slightly lower than December’s figures by one point.
Concerns about the quality of labor remain a significant operational challenge.
However, the percentage of owners citing this as their top issue decreased by one point to 18%.
Additionally, worries about labor costs, while still a concern, dipped by two points, now standing at 9%.
This figure is notably lower than the peak of 13% reached in December 2021.
To attract and retain talent, 33% of small business owners opted to increase wages in January.
This move represented a four-point rise from December, which had recorded the lowest wage rates since March 2021.
Nevertheless, planned wage increases for the upcoming three months dropped, with only 20% of owners intending to up compensation, down four points from December.
As small business owners continue to navigate hiring challenges, they remain cautiously optimistic about the economic landscape.
The persistent tight labor market, combined with a shortage of qualified candidates, particularly in skilled labor sectors, presents significant challenges.
Still, the trend of rising wages suggests that businesses are adapting their strategies to attract and retain talented employees, striving to maintain their operations in the face of ongoing workforce shortages.
Source: Smallbiztrends