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Small Business Labor Costs and Hiring Difficulties Ease in December, According to NFIB Job Report

Struggling small businesses, particularly in construction and transportation, grapple with ongoing labor cost reductions and hiring difficulties, as detailed in the latest NFIB Jobs Report for December.

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Small Business Employment Costs and Recruitment Difficulties Soften in December as Per NFIB Jobs...
Small Business Employment Costs and Recruitment Difficulties Soften in December as Per NFIB Jobs Report

Small Business Labor Costs and Hiring Difficulties Ease in December, According to NFIB Job Report

Small Business Labor Market Eases Slightly, Yet Challenges Persist

The National Federation of Independent Business (NFIB) has released its latest report on the state of small business hiring and labor costs in the U.S. The data suggests a small but noticeable easing in the small business labor market, with fewer unfilled job openings and slower wage growth.

In December, 35% of small business owners reported unfilled job openings, a one-point decrease from November. This trend is a reflection of the slightly declining small business hiring activity. In July, only 57% of small businesses were hiring or trying to hire, down one point from June.

The slowdown in wage growth among small businesses is also evident in the report. In July, only 27% of small businesses raised compensation, a six-point drop from June, and just 17% plan to raise wages over the next three months, down two points from June. This decline suggests a cooling in wage inflation among small businesses.

However, the quality of labor remains a critical concern, identified as the top issue for 21% of small business owners in July. About 84% of those hiring reported few or no qualified applicants, though this is a slight improvement from June. Openings for skilled workers stood at 29%, and unskilled labor openings at 12%, both down slightly from June.

Small businesses remain cautiously optimistic about growth. 14% plan to add jobs in the next three months, a one-point increase from June, aligning with a net positive outlook on job creation. Despite these labor market tensions, labor costs remain a significant concern, with 11% of small business owners citing it as their most important problem.

The report found that fewer businesses are raising compensation and planning future increases, reflecting a gradual softening in the labor market. However, job openings remain highest in the transportation, construction, and manufacturing sectors. Agriculture and finance reported the lowest percentage of unfilled positions.

In conclusion, the NFIB data portray a small business labor market that is slightly easing, with fewer unfilled job openings and slowing compensation increases. Yet, persistent challenges remain around the quality and availability of qualified workers. Hiring plans indicate cautious optimism despite these labor market tensions.

[1] NFIB (2025). Small Business Economic Trends. [Online]. Available: https://www.nfib.com/content/economic-research/small-business-economic-trends [Accessed: 2025-12-31].

[2] NFIB (2025). NFIB Small Business Optimism Index. [Online]. Available: https://www.nfib.com/content/economic-research/nfib-small-business-optimism-index [Accessed: 2025-12-31].

[3] NFIB (2025). NFIB Job Openings Survey. [Online]. Available: https://www.nfib.com/content/economic-research/job-openings-survey [Accessed: 2025-12-31].

[4] NFIB (2025). NFIB Compensation Survey. [Online]. Available: https://www.nfib.com/content/economic-research/compensation-survey [Accessed: 2025-12-31].

[5] NFIB (2025). NFIB Hiring Survey. [Online]. Available: https://www.nfib.com/content/economic-research/hiring-survey [Accessed: 2025-12-31].

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