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NFIB October Report Shows Record Share of Small Businesses Raising Compensation to Compete for Scarce Workers

  • October jobs report from the National Federation of Independent Business finds a record share of small businesses are raising compensation
  • Trend goes in hand with ongoing labor challenges, with nearly half of small business employers saying they had jobs they were unable to fill
  • NFIB warns that the trends could contribute to inflationary pressures well into 2022

Summary by Dirk Langeveld

A record share of small business owners were raising their compensation as they endured ongoing labor challenges, according to a recent survey from the National Federation of Independent Business.

In its jobs report for October, NFIB found that a net share of 44 percent of small business owners were raising their compensation – up two points from September to reach a record high. A net share of 32 percent said they expect to increase compensation in the next three months, up two points from September’s record high.

“Small business owners continue to make business and hiring adjustments to help manage the busy holiday season,” said Bill Dunkelberg, chief economist at NFIB. “The staffing shortage has not eased up for small businesses and many are passing those costs on to their customers.”

  • 49 percent of small business owners reported that they had job openings they were unable to fill, well above the 48-year average of 22 percent
  • 24 percent said labor quality was the top problem they were facing, while 10 percent named labor cost
  • 26 percent said they plan to create jobs in the next three months
  • 42 percent say they have openings for skilled jobs, while 24 percent said they have openings for unskilled jobs
  • 62 percent said they were actively hiring or trying to do so, a drop of five points from September; 58 percent of overall businesses said they were receiving no or few applications from qualified people – down four points
  • NFIB suggests that this decrease, as well as drops in other labor market indicators, could signal better hiring conditions for small business owners; however, it also said the trend of higher compensation could lead to higher consumer prices and contribute to inflationary pressures well into 2022

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