Small business owners are feeling the heat as job openings remain high despite an overall slowdown in the labor market. According to NFIB’s recently released June jobs report, 36% of small business owners reported unfilled job openings, a two-point increase from May. This statistic underscores the ongoing challenge of attracting qualified talent in today’s competitive environment.

“Despite the slowing labor market, many small business owners are still looking to attract applicants and hire for their open positions,” remarked Chief Economist Bill Dunkelberg. “Compensation pressures remain strong for those owners who are competing to retain and attract talent in their business.”

The report highlights a significant uptick in hiring activity, with 58% of small business owners either hiring or attempting to hire in June, which is three points higher than the previous month. However, the talent pool remains limited, as 86% of those actively looking to fill positions reported encountering few or no qualified applicants. Specifically, 25% noted a complete absence of qualified candidates, while another 25% reported very few suitable applicants.

Small enterprises are particularly struggling to fill skilled labor positions, a critical need given that 30% have openings in this category. Unskilled labor vacancies stand at 13%, unchanged for five consecutive months. Job openings are particularly prevalent in sectors like construction, manufacturing, and transportation, while finance and agriculture are facing the lowest levels of unfilled positions.

Plans for new job creation also point to a cautious optimism, with a seasonally adjusted net of 13% of small business owners indicating they intend to add jobs in the next three months. However, concerns about labor quality persist, holding steady at 16% as the top operational issue faced by small businesses. Rising labor costs have emerged as another important concern, with 10% of owners citing it as their leading problem, an increase from May.

Compensation strategies are rapidly evolving in response to these challenges. In June, a net 33% of small business owners reported raising overall compensation—an increase of seven points from May and the largest since January 2020. Looking ahead, a net 19% plan to raise wages in the next three months, slightly down from the previous month, indicating a complex dynamic between wage inflation and the availability of skilled labor.

For small business owners, these statistics illustrate the pressing need to reassess hiring strategies. Focusing on compensation and benefits packages may be critical to attracting the right talent while maintaining profitability. However, it is equally important to recognize the challenges associated with a competitive labor market, especially in industries heavily reliant on skilled labor.

Additionally, as small businesses seek to expand their workforce, they may encounter hurdles related to budget constraints and existing economic conditions. It’s essential for owners to consider how they can remain competitive not only through wages but also by offering unique benefits, flexible work environments, and opportunities for skill development.

As the labor landscape remains fraught with challenges, proactive measures will be vital for small business owners looking to secure the talent they need. Staying informed about industry trends and adapting hiring practices accordingly can enable entrepreneurs to navigate this complex terrain successfully.

For further details, the full NFIB Jobs Report is available here.

With continued vigilance and strategic planning, small business owners can better position themselves to meet staffing challenges head-on, ensuring their enterprises not only survive but thrive in this dynamic market.

Image Via NFIB

This article, “Main Street Faces Ongoing Job Opening Struggles This June” was first published on Small Business Trends