The US economy is sending mixed signals, but the consistent message from small firms is an intense desire to hire. The number of jobs increased, as did compensation in March. That’s according to the latest monthly employment survey from the National Federation of Independent Business, to be released later today.
Small firms hired an unspectacular 0.16 people per firm in March, but that number is definitely moving in the right direction. Small businesses added an average of 0.11 employees per firm in February after a flat January and a weak 0.04 in December. The owners would like to hire many more workers if only they could find some. NFIB Chief Economist William Dunkelberg describes the landscape for independent operators who continue to look everywhere for workers ready, willing and able to help:
Small businesses continue to raise wages to retain employees and fill historically high levels of vacancies. Twenty-two percent said quality of work was their top business concern, unchanged from February but now second only to inflation. Eight percent named labor costs as their top business concern, down 3 points from February. Labor shortages continue to hamper the economy of small businesses as owners try to compete for labor…
47 percent (seasonally adjusted) of all owners reported vacancies they were unable to fill in the current period, down 1 point from February. The vacancy rate is well above the 48-year historical average of 23 percent.
Labor shortages are particularly acute in the transport, construction and manufacturing sectors. Storage companies also have a wealth of vacancies. Jobs for both skilled and unskilled workers abound throughout the economy, and Mr. Dunkelberg calls it “one of the tightest domestic labor markets in recent history”.
The NFIB data also shows that despite a number of recent signs the economy is slowing and a consensus among professional economists that we are heading for mediocre growth, appetites to expand the workforce remain intact among small businesses before is healthy. The NFIB economist reports:
Owners’ plans to fill vacancies remain high, with a seasonally adjusted net 20 percent planning (hope) to add new jobs over the next three months, up 1 point from February.
Small business owners are also still willing to pay more to get the labor they need. The percentage of small businesses handing out raises remains near record highs. According to the NFIB report:
Seasonally adjusted, a net 49 percent said they would increase compensation, 4 points more than in February. A net 28 percent plan to increase compensation over the next three months, up 2 points from February. These rising labor costs are passed on to consumers via higher selling prices.
News of historically high inflation remains worrying. But for now, the US economy continues to offer historic abundance of job openings.
James Freeman is co-author of The Cost: Trump, China and American Revival.
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https://www.wsj.com/articles/more-jobs-and-more-raises-at-small-businesses-11648743644 More jobs and more raises at small businesses