Small Business Owners To Raise Compensation

(January 30, 2020) — Thirty percent of small business owners reported raising compensation at year end, and 26% said they plan to do so in the coming months, according to the National Federation of Independent Business’s (NFIB) monthly jobs report. The survey recorded the highest level of compensation increases since December 1989.

“Despite a tight labor market, small business owners are doing exactly what they said they would do thanks to tax relief. They’re creating new jobs and raising compensation at record levels,” said NFIB president and CEO Juanita D. Duggan. “The only thing holding them back continues to be finding qualified workers, but in spite of that challenge the small business economy is roaring.”

Up from the previous month, 61% of small business owners in December reported hiring or trying to hire, and 88% of those reported few or no qualified applicants for the job. Thirty-eight percent of all owners reported job openings they could not fill. In transportation, 50% of owners had job openings, while 48% had openings in construction and manufacturing.

A seasonally adjusted net 21% said they plan to create new jobs, up three points from November. Nineteen percent of owners plan to increase total employment at their firms, and 5% plan reductions. Twenty-two percent of owners in construction plan to boost employment and 5% plan reductions. Ten percent of owners cited labor costs as their top problem, one point below the record-high level reached in September 2019. In the retail sector, 18% reported labor costs as their main issue, a record for the industry.

“The labor shortage continues to hinder the productivity of small businesses,” said NFIB’s chief economist Bill Dunkelberg. “The retail industry is facing compensation pressures due to labor shortages, but also higher minimum wage laws in many parts and wage competition with large firms.”

Thirty-one percent of owners have openings for skilled workers and 15% have openings for unskilled labor. Down from November, 31% of owners reported few qualified applicants for their open positions and 22% reported none, up one point. Reports of few or no qualified applicants were high in construction at 67%, manufacturing, 57%, and retail, 54%.

(SOURCE: The Weekly Propane Newsletter, February 3, 2020. Available by subscription)