Hiring Challenges Persist for Small Businesses, Construction and Transportation Hit Hardest

Hiring difficulties remain a significant challenge for small businesses, particularly in the construction and transportation sectors, according to NFIB’s January jobs report. The report found that 35% of small business owners reported job openings they could not fill in January, a figure unchanged from December.

Job openings were most prevalent in transportation, construction, and manufacturing, while the agriculture and finance sectors reported the fewest vacancies. The construction sector saw a notable four-point increase in job openings from December but remained two points lower than January 2024.

“Small business owners are certainly feeling hopeful about the direction of the economy,” said NFIB Chief Economist Bill Dunkelberg. “However, employment remains a top concern as Main Street owners continue to face challenges in finding qualified employees to fill their open positions.”

A total of 52% of small business owners reported hiring or attempting to hire in January, a three-point decline from December. Among them, 47% (90% of those hiring or trying to hire) reported few or no qualified applicants for open positions. Breaking this down further:

• 24% reported few qualified applicants
• 23% reported no qualified applicants

Skilled labor remains in demand, with 29% of businesses reporting openings for skilled workers (unchanged from December), while 10% had openings for unskilled labor, a three-point drop.

Despite hiring challenges, 18% of business owners plan to create new jobs in the next three months, a slight one-point drop from December.

Labor quality remains a top operational concern, though the percentage of owners citing it as their biggest challenge fell one point to 18%. Similarly, labor costs as the single most important business problem dropped two points to 9%, remaining four points below the peak of 13% recorded in December 2021.

To attract and retain workers, 33% of small business owners reported raising compensation in January, a four-point increase from December’s lowest level since March 2021. However, forward-looking plans for wage increases showed a decline, with 20% of owners planning to raise compensation in the next three months, down four points from December.

Looking Ahead

While hiring difficulties persist, small business owners remain cautiously optimistic about the economic outlook. The tight labor market and shortage of qualified applicants continue to pose challenges, particularly in industries that rely on skilled labor. However, compensation increases suggest that businesses are adjusting strategies to attract talent and maintain operations amid ongoing workforce shortages.

This article, "Hiring Challenges Persist for Small Businesses, Construction and Transportation Hit Hardest" was first published on Small Business Trends