Optimism Holds Steady Amid Hiring Challenges
Small businesses in the U.S. remain optimistic about the economy, even as they continue to struggle with labor shortages. The National Federation of Independent Business (NFIB) released its monthly small business optimism index for January, showing a slight dip from the previous month but still maintaining above-average levels. However, economic uncertainty among small business owners surged, reaching the third-highest recorded reading.
One of the most pressing concerns for small businesses is hiring. According to the survey, over a third of businesses reported having job openings they were unable to fill in January. Holly Wade, executive director of the NFIB Research Center, emphasized that while businesses are eager to hire, the process remains extremely difficult. “It’s been a tough road over the last number of years to find applicants for those high-level job openings that they continue to have,” Wade noted.
Skilled Labor Shortages Leave Jobs Unfilled
The hiring struggles are particularly pronounced in skilled trades, where employers find it difficult to attract qualified workers. The NFIB survey revealed that 90% of small business owners actively hiring in January reported receiving “few or no” qualified applications. Federal employment data also highlights a tight labor market, with the ratio of open jobs to unemployed workers hovering around 1 to 1 in recent months. However, industries such as construction are facing even greater shortages of skilled labor.
Bruce Jovaag, owner of Norse Construction in St. Louis, Missouri, is among those facing this challenge. His small crew handles kitchen and bathroom remodels, as well as room additions and basement finishes, but a lack of available workers has resulted in a four-month waitlist for customers. “I would love to be able to run a much shorter wait time, but I just simply can’t,” Jovaag said.
Finding specialized workers, such as carpenters, has become increasingly difficult, forcing him to rely on subcontractors. Even when he does find applicants, their expectations for benefits and compensation often exceed what small businesses can afford. “I just had an interview recently with a gentleman, but his demands were just astronomical,” Jovaag said. “Health insurance and vacation right away and all this stuff—I can’t afford that.”
Competitive Labor Market Pressures Small Firms
The labor shortage has been an ongoing issue for skilled trades, but small businesses are feeling the pressure more than ever. Nich Tremper, senior economist at payroll platform Gusto, pointed out that smaller firms struggle to compete with larger companies that offer higher wages and better benefits. “Small businesses have to compete with the big guys on labor costs, and a lot of times they just can’t do that,” Tremper explained.
Adding to the uncertainty, business owners are also grappling with concerns over trade policies and immigration regulations, which affect long-term workforce planning. As hiring difficulties persist, many small businesses are forced to make adjustments, whether through subcontracting, increasing wait times, or limiting growth opportunities.
While optimism remains, the hiring challenges underscore the ongoing labor shortages that continue to hinder small businesses across various industries.
