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Small business owners are facing a fluid employment landscape as recent data from the National Federation of Independent Business (NFIB) sheds light on current job market trends. The NFIB’s December jobs report reveals a mixture of challenges and opportunities that small business owners must navigate as they plan for growth in 2026.
In December, 33% of small business owners reported unfilled job openings—a figure that remains unchanged from November and notably higher than the historical average of 24%. This statistic highlights an ongoing struggle with labor shortages, particularly for skilled positions, which saw a 2-point increase, with 28% of owners seeking skilled workers. Meanwhile, openings for unskilled labor dipped to 10%, down 2 points from the previous month.
“The economic climate continues to support the small business labor market,” said NFIB’s Chief Economist Bill Dunkelberg. He notes a shift in focus among business owners; while fewer are now citing labor as their primary challenge, compensation costs are becoming increasingly pressuring.
The report indicates that a seasonally adjusted net of 17% of owners plan to create new jobs in the coming three months. Although this reflects a slight dip of 2 points from November, it still underscores a hopeful outlook for employment growth among small businesses. Additionally, 53% of owners reported hiring or attempting to hire, though this number has declined by 3 points compared to the previous month.
Dunkelberg pointed out that while many owners are eager to add staff, they face roadblocks. Of those hiring or seeking to hire, 48% reported having few or no qualified applicants—a decrease of 2 points. Specifically, 25% acknowledged they had few qualified applicants while 23% reported having none, a rise of 3 points. This discrepancy raises critical questions about workforce readiness and skills training.
Labor quality is weighing heavily on the minds of small business owners. In December, 19% identified labor quality as their most pressing problem, a slight decline of 2 points from November. Conversely, those citing labor costs as their principal issue rose to 9%—an increase that may pressure owners to re-evaluate their compensation strategies.
Compensation may indeed be a key area of focus for many businesses in the upcoming months. The report shows that a net 31% of small business owners raised compensation in December, up 5 points from November. Looking forward, 24% plan to increase compensation in the next three months, with no change from previous data.
For small business owners, there are several implications in these findings. The ongoing labor shortage means that retaining existing employees may be just as crucial as recruitment efforts. Offering competitive wages and benefits could help mitigate challenges associated with filling open roles. Ultimately, a focus on employee satisfaction and workplace culture might also lead to better retention rates.
However, small businesses may struggle with escalating compensation costs. Owners must weigh the impact of increased wages on their operational budgets, especially in a climate where profit margins are already tight. It’s a balancing act that requires careful consideration and strategic planning.
Moreover, as the demand for skilled labor continues to rise, small business owners might want to consider investing in employee professional development. This could bridge the skills gap and enhance internal talent pools while also demonstrating a commitment to employee growth.
As 2026 unfolds, the landscape for small business employment continues to evolve, presenting both challenges and possibilities. Adapting to these conditions will require adaptability, creativity, and a clear understanding of the resources available to support hiring efforts.
For more detailed insights, you can view the complete NFIB Jobs Report here.
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