Small businesses are a cornerstone of the economy, but they face growing challenges in finding qualified workers. Recent reports highlight a worrying trend of declining job openings, which could impact everyone’s job prospects.

Small Business Hiring Stalls

According to the National Federation of Independent Businesses (NFIB), job openings in small businesses across the country fell significantly in May. The NFIB’s Small Business Employment Index, which tracks employment trends, remained mostly unchanged at 100.3, slightly down from 100.4 in April. This marks the third month in a row that the index has declined and is below the expected average of 101.2 for 2025. However, it still stands a bit higher than the historical average of 100.

In May, about 29% of small business owners reported having job openings they were unable to fill. This is a notable decline, down five percentage points from April, and is the lowest level since May 2020 during the early stages of the pandemic. Individuals seeking skilled positions have seen a slight drop in available openings, while unskilled labor openings decreased even more.

Concerns Over Labor and Costs

Bill Herrle, the NFIB Florida Executive Director, pointed out the pressures small businesses are facing due to rising operation costs, with labor costs being a central issue. As a result, hiring has stagnated. Only a net 9% of owners plan to create new jobs in the upcoming three months, dropping four points from last month and reaching a low not seen since May 2020.

Despite struggles, 55% of small business owners reported attempting to hire this past month, which is a slight increase from April. However, the hiring process is fraught with challenges: 84% of employers looking for new employees reported having few or no qualified applicants. Additionally, 24% encountered only a few qualified applicants, while 22% found none at all.

Labor Quality vs. Labor Costs

Interestingly, while labor quality concerns among small business owners have decreased—only 13% cited it as their biggest challenge—concerns regarding labor costs have surged. Now, 14% of owners stated that labor costs are their most pressing issue, a five-point increase from previous reports and the highest it has ever been.

Moreover, despite the decline in job openings and hiring plans, the compensation landscape remains steady. A net 31% of small business owners reported increasing salaries in May, which is a minor uptick from April. Meanwhile, 18% plan to raise compensation over the next three months, with no changes from the previous month.

The Bigger Picture

The trends highlighted in the NFIB report indicate that small businesses are feeling the strain of a labor market that is not meeting their needs. Employers are dealing with increased operational costs and a shortage of qualified candidates. This situation has far-reaching implications for the economy, as small businesses are vital for job creation and economic growth.

What this means for you:

If you’re interested in potential job opportunities or negotiating an employment contract, understanding the challenges small businesses face can help you navigate the job market. If you ever need to review employment contracts, legal-document-to-plain-english-translator/”>AI legalese decoder can help you translate it into plain English in seconds.

Source: https://www.keysnews.com/flkeysfreepress/business/news/small-business-hiring-stalled-in-may/article_165163b8-8f66-4873-9b11-e77b720199d2.html