Small businesses are crucial to our economy, but right now, they are facing significant challenges in hiring and managing costs. Understanding the current employment landscape can help everyday people make informed decisions about their jobs and spending.

Flat Employment Growth for Small Businesses

The NFIB’s May Jobs Report reveals that small business employment is barely moving. The Small Business Employment Index stayed at 100.3 in May, a slight drop from 100.4 in April. This number is now below the average of 101.2 for 2025 but just above the historical average of 100.0. This trend marks the third consecutive month of decline, leaving many wondering about the future of job availability in small businesses.

Small business owners are experiencing obstacles when trying to fill job openings. In May, 29% of them reported having unfilled positions, down 5 percentage points from April. This marks the lowest level since May 2020. About 27% are seeking skilled workers, while 9% are looking for unskilled labor, both showing slight decreases.

Hiring Difficulties Persist

According to Amanda Fisher, NFIB Michigan State Director, small businesses are still struggling to find qualified workers. Labor costs are on the rise, adding to the burden of small business owners, and Fisher urges lawmakers to consider these feelings in upcoming regulations.

A concerning trend is the dwindling number of business owners planning to hire in the next three months. Only a net 9% said they intend to add jobs, a drop of 4 percentage points from April, representing the lowest hiring intentions since May 2020. This figure is now below the historical average, which stands at 11%. While 55% of business owners reported hiring or attempting to hire last month, 46%—or 84% of those currently hiring—expressed frustration over the lack of qualified applicants.

Shifting Focus to Labor Quality and Costs

Interestingly, the perception of labor quality as the primary challenge for small business owners has dropped to its lowest level since December 2016. In May, just 13% of owners cited it as their top concern, a decrease of 5 percentage points from April. This may seem positive, but it contrasts sharply with rising labor costs, which have now reached unprecedented highs in the survey history. In fact, 14% of business owners reported labor costs as their main issue, an increase of 5 points from last month.

This shift highlights the constant balancing act small businesses must strike between managing costs and finding suitable talent. Even with job openings at record lows, small business owners are still raising compensation. A net 31% reported increasing wages in May, a slight uptick of 1 percentage point from April. Plans to raise compensation within the next three months remained unchanged, with a net 18% indicating they would do so.

What This Means for You

These trends in small business hiring can impact job seekers and consumers alike. If you’re looking for employment, be aware that while positions may be limited, small businesses might still offer competitive wages. Additionally, if you are ever faced with reviewing employment contracts or other related documents, AI legalese decoder can help translate them into plain English in seconds.

Source: https://www.nfib.com/news/news/michigan-small-business-job-openings-decline-in-may/