The latest employment report sheds light on the struggles small businesses face in today’s economy. This matters because understanding these challenges can help everyday people navigate job opportunities and the job market.

Little Change in Employment Index

The May Jobs Report from the National Federation of Independent Business (NFIB) revealed minimal movement in the employment sector. The Small Business Employment Index recorded a slight drop, registering at 100.3 in May, down from 100.4 in April. This marks the third month of decline for the index.

Despite reaching below 2025’s average of 101.2, May’s reading is still a bit above the historical average. However, it’s clear that small businesses continue to feel the pressure, leading to a complicated job market for prospective employees.

Labor Quality vs. Labor Costs

Interestingly, while only 13% of small business owners named labor quality as their biggest concern, this is a significant decrease from April’s figures. This is the lowest level reported since December 2016. However, the report signals a shift in focus; concerns over labor costs surged to unprecedented highs. Now, 14% of small business owners consider rising labor costs to be their primary issue, a five-point increase from April.

Eileen Kean, NFIB’s New Jersey State Director, emphasizes the impact of rising costs on business growth, saying, “Finding qualified applicants remains a real challenge, and rising costs are making it harder for owners to grow their businesses.” This statement highlights the tension between hiring skilled labor and managing expenses.

Unfilled Job Openings Decline

In May, 29% of small business owners indicated they had job openings they couldn’t fill. This figure represents a 5-point decrease from April and is the lowest level seen since May 2020. Among these vacancies, 27% required skilled workers—a drop of 2 points—and 9% were for unskilled labor, down 4 points.

The outlook for new hires isn’t promising either. A net 9% of business owners plan to create new jobs in the next three months, a decline of 4 points from April. This is the lowest number since May 2020 and below the historical average of net 11%.

Despite fewer job openings and lower hiring intentions, 55% of business owners reported trying to hire, which is a slight increase from the previous month. However, a striking 46% of those owners reported facing challenges due to a lack of qualified applicants.

Compensation Trends Remain Steady

Even with significant changes in job openings and hiring plans, compensation data has shown little movement. A net 31% of small business owners indicated that they raised compensation in May, which is an uptick of just one point from April. Meanwhile, 18% have plans to increase compensation in the coming months, remaining unchanged from the previous month.

What does this mean for small business owners and job seekers alike? While compensation is steady, the overall climate suggests that hiring remains tough and costs for labor are on the rise.

What this means for you

The NFIB report highlights the ongoing challenges small businesses face, which can affect job opportunities for job seekers. If you ever need to review an employment contract, AI legalese decoder can translate it into plain English in seconds. Understanding these trends can help you navigate your career path more effectively.

Source: https://www.roi-nj.com/2026/06/05/industry/nfib-jobs-report-small-business-employment-index-falls-for-third-straight-month/