- Small businesses added an average of 0.21 workers per company in June 2019.
- 58% of SMB owners reported hiring or trying to hire, marking a four-point decline from May.
- 21% of small business owners said the "difficulty of finding qualified workers" was their most important problem.
As the American economy continues to perform well, small business owners are adding new positions and paying their workers more, according to a new report from the National Federation of Independent Business (NFIB).
According to the NFIB's monthly jobs report, June was a great month for American small businesses. Last month was the 19th consecutive month of employment growth, with the average business adding 0.21 workers. However, that figure marked a slight decline from the average 0.32 workers added in April and May.
Among respondents, 12% of small business owners said they added an average of 4.3 workers per company, while 7% reported cutting employment by a seasonally adjusted average of 4.6 workers. Those shifts in employment numbers, said NFIB President and CEO Juanita D. Duggan, were encouraging for the overall SMB outlook in the U.S.
"At a time when owners are continuing to struggle to find workers, they're doing everything they can to recruit them, including raising wages," Duggan said. "The demand for workers is showing no signs of abating, evidence that tax cuts and deregulation lead to job creation, so it is important lawmakers stay away from policies that could stifle this historic growth."
Hiring difficulties for small businesses
Even though SMB owners reported high levels of optimism back in May, respondents in June said they noticed the prospect of hiring qualified workers becoming more difficult.
According to the NFIB's data, 58% of respondents said they were hiring or trying to hire, marking a 4% decrease from May. Of those individuals, 86% said they were unable to hire any new workers because there were "few or no qualified applicants" for the open positions. The NFIB defines "qualified" as someone who has "position-appropriate skills but also encompasses appearance, attitude, social skills, [reasonable] wage expectations and work history."
Since this apparent shortage of a skilled labor force has the potential to slow growth, 21% of respondents see it as the "single most important business problem."
Continued data shows that 36% of owners reported having job openings that they couldn't fill. This gap between open positions and the number of skilled workers available is more apparent in some industries. In the construction industry, for example, 49% of owners said they had job openings, but 90% of those openings were for skilled workers. Similarly, 69% of transportation SMB owners said they had job openings but 87% of them were for skilled workers.
As a result, 10% of all respondents said they opted to use temporary workers to fill in gaps.
SMB plans for future job creation
Despite the somewhat dreary hiring prospects, small business owners told the NFIB they were still optimistic that they could create new positions and fill them in the near future.
Approximately 19% of business owners (seasonally adjusted) said they planned to create new jobs, which is down two points from the previous report. Likewise, 23% (not seasonally adjusted) said they planned to add to their firms, which is down six points, while 3% said they planned to cut back in the coming months.
While the construction industry reported some hiring stumbling blocks, 32% of respondents said they planned to hire for more positions, and 61% of transportation SMB owners said they would do the same thing.
When it comes to compensation, owners are similarly optimistic, as 28% of respondents said they planned to increase wages. That number is down six points from May, but the NFIB said it remains "historically strong" and continues a trend that's been going on for more than a year.
"Small business owners have been reporting raising worker compensation, wages, and benefits at historically near-record percentages for more than a year," said NFIB Chief Economist Bill Dunkelberg. "The economy is showing wage gains, and small business has been leading the way."