SUPERNEWS

Macro

Small Business Hiring Eases: Labor Market Loosens

Small businesses find hiring easier, signaling a cooling labor market and reduced wage pressure, amidst challenges like inflation.

By Athena Xu

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3/7, 08:27 EST
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Key Takeaway

  • U.S. small businesses are finding it easier to hire, indicating a cooling labor market, per NFIB's latest report.
  • Small firms are reducing future job opening plans as the worker shortage eases and the labor market loosens.
  • With more qualified workers available, there's less pressure on small businesses to increase wages.

NFIB Employment Report Highlights

The latest NFIB employment report indicates a cooling labor market, with small business owners finding it easier to attract and retain employees. NFIB Chief Economist William Dunkelberg notes a slowdown in employment activity among small business owners, with plans to create job openings decreasing. The report suggests a more abundant supply of qualified workers, leading to reduced wage pressure. Dunkelberg highlights the trend, stating, "Measured in various ways, the tight labor market continues to get more loose."

Small Business Statistics in 2024

Small businesses play a vital role in the US economy, with 99.9% of American businesses classified as small businesses. There are approximately 33.2 million small businesses in the US, employing 61.7 million Americans. Women-owned businesses represent 43.2% of small businesses, generating $388.1 billion in revenue. The spirit of entrepreneurship remains strong, with a significant increase in business applications in recent years.

Challenges Facing Small Businesses

Small business owners face various challenges, including rising costs, labor shortages, and difficulties in finding skilled talent. Inflation is a significant concern, with 74% of businesses reporting increased costs over the previous year. The tough labor market negatively impacts small businesses, with 47% stating that the market is not improving. Additionally, 48% of owners mention that recent increases in state minimum wages have affected their businesses.

Future Predictions and Solutions

Despite the challenges, small businesses remain resilient, with many owners planning to grow their businesses despite economic concerns. Tools like Homebase offer solutions for streamlining HR tasks, from recruitment to onboarding, training, scheduling, and compliance. By centralizing these processes in one software suite, small business owners can focus on business growth and employee engagement, leading to increased productivity and success.

Street Views

  • William Dunkelberg, NFIB Chief Economist (Neutral on the labor market):

    "The great American worker shortage continues to ease, as owners of U.S. small businesses are finding it a little easier to attract and retain employees." "Owners are also reducing their plans to create job openings in the future." "Measured in various ways, the tight labor market continues to get more loose." "Not surprisingly, a more plentiful supply of qualified and available workers means that owners see less need to lift wages."