Small Business Owners Grapple with Higher Costs, Lack of Workers
IMAGE COURTESY OF THE NATIONAL FEDERATION OF INDEPENDENT BUSINESSES
Small business owners see their outlook growing gloomier all the time. The Small Business Optimism Index from the National Federation of Independent Businesses dropped 3.6 points in June to 89.5, marking the sixth consecutive month below the 48-year average of 98.
Small business owners expecting better business conditions over the next six months decreased seven points to a net negative 61%, the lowest level recorded in the 48-year survey. Expectations for better conditions have worsened every month this year.
Inflation continues to be a top problem for small businesses with 34% of owners reporting it was their single most important problem in operating their business, an increase of six points from May and the highest level since quarter four in 1980. Sixteen percent of construction owners surveyed reported inventory shortages.
Owners’ plans to fill open positions remain elevated, with a seasonally adjusted net 19% planning to create new jobs in the next three months. But filling these positions remains a struggle.
Fifty percent (seasonally adjusted) of all owners reported job openings they could not fill in the current period. Forty-two percent have openings for skilled workers (unchanged) and 22 percent have openings for unskilled labor (down 3 points). The difficulty in filling open positions is particularly acute in the construction, as well as manufacturing, services and retail sectors.
Finding qualified workers is an even bigger challenge. Twenty-three present of business owners surveyed said that labor quality was their top business problem. Ninety-four percent of those hiring or trying to hire reported few or no qualified applicants for the positions they were trying to fill.
Owners are paying more for the qualified workers they can find. A net 48% (seasonally adjusted) reported raising compensation. A net 28% of owners plan to raise compensation in the next three months, which the NFIB reports is historically very high. Eight percent of owners cited labor costs as their top business problem.
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