Small Business Employment Index Rises, Yet Skilled Labor Shortage Persists

Small businesses are navigating a labor market that continues to tighten, according to NFIB’s February Jobs Report. The report indicates a notable uptick in the Small Business Employment Index, which rose nearly 1 point to 103.5, reflecting ongoing challenges and opportunities for small business owners.

The increase in the employment index signifies a robust job market that’s outperforming past averages. Currently, the index sits 2.3 points above the 2025 average and 3.5 points above the historical norm of 100. Such metrics suggest that small business owners may face both opportunities for growth and hurdles in securing the talent they need.

Key Takeaways:

• A notable 33% of small business owners reported unfilled job openings, a rise of 2 points from January. This figure remains significantly above the historical average of 24%.
• The demand for skilled workers is particularly pressing, with 28% of respondents indicating openings for these roles, marking an increase of 3 points from January.
• Although 54% of business owners are hiring or attempting to, 46% reported having few or no qualified applicants, indicating a mismatch between job openings and available talent.

Bill Dunkelberg, NFIB’s Chief Economist, points out the implications of these trends: “February’s numbers show a growing tightness in the small business labor market. While the overall market remains in balance, employers need more skilled workers to fill open positions.”

Despite the rising number of job openings, plans for new hires appear to have plateaued. The net percentage of owners intending to create jobs in the next three months has decreased to 12%, a dip of 4 points and a level not seen since May 2025. However, this figure remains close to the average net of 11% over the years.

For small business owners, these statistics underline a critical point: there are jobs available, but finding qualified candidates is becoming increasingly difficult. The struggle is evident, with 85% of those trying to hire indicating they have encountered a shortage of qualified applicants. This paints a challenging picture for business growth, making it essential for entrepreneurs to adapt their recruitment strategies.

While labor quality concerns have seen a decrease—with only 15% citing it as their most pressing issue—labor costs remain a persistent challenge, with 9% listing it as their biggest problem. As compensation efforts evolve, the report notes that a net 34% of small business owners raised wages in February, the highest level recorded since March 2025.

As competition for talent intensifies, small business owners may find themselves compelled to enhance their compensation packages or offer unique benefits to attract skilled labor. While 22% plan further raises in the next three months, maintaining financial sustainability while increasing payroll can pose challenges.

In a rapidly changing job market, understanding these dynamics can help small business owners refine their hiring practices and work environments. Employers might need to consider upskilling current employees, investing in training programs, or even collaborating with local educational institutions to bridge the skills gap.

The NFIB February Jobs Report highlights the evolving landscape of employment for small businesses. It emphasizes the importance of adapting hiring strategies and workforce development to not only fill existing roles but to prepare for future growth as demand remains high.

For full details, the complete NFIB Jobs Report can be accessed here. This information serves as a vital resource for small business owners navigating the current labor landscape.

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This article, "Small Business Employment Index Rises, Yet Skilled Labor Shortage Persists" was first published on Small Business Trends

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