March 8, 2019
The great American jobs machine is still roaring. Slowing global growth and trade friction may cloud the economic horizon, but U.S. small businesses in February went on an historic hiring binge. That’s according to the latest employment report from the National Federation of Independent Business, due out later today.
NFIB has been conducting this monthly survey for decades. The organization’s chief economist William Dunkelberg reports that they’ve never seen results like these:
Job creation broke the 45-year record in February with a net addition of 0.52 workers per firm (including those making no change in employment), up from 0.25 in December and 0.33 in January. The previous record was 0.51 reached in May 1998.
NFIB also found a historic low in the percentage of business owners reducing employment—just 3% of survey respondents. “Owners are trying to hold on to the employees they have,” says Mr. Dunkelberg.
Readers can be forgiven for thinking that the economy is headed back down to the slow-growth new normal of the past decade. That’s certainly the consensus in the media industry. But across all industries, the owners of small firms don’t seem to share that view. After the February hiring spree, the survey finds plans for future job creation remain robust and the main obstacle is not lack of business opportunities, but a lack of workers to take advantage of them.
Mr. Dunkelberg shares more results from the survey of firm owners:
Fifty-seven percent reported hiring or trying to hire (up 1 point), but 49 percent (86 percent of those hiring or trying to hire) reported few or no qualified applicants for the positions they were trying to fill… Twenty-two percent of owners cited the difficulty of finding qualified workers as their Single Most Important Business Problem, only 3 points below the record high. Ten percent of owners find labor costs as their biggest problem, a record high for the 45-year survey.
It may be a problem for owners but of course rising wages represent welcome news for workers. A net 31% of firms reported raising compensation in February—below January’s 36% surge but still historically strong.
Small firms in the U.S. are reporting record job creation, higher wages and robust expansion plans.
All of this may have U.S. workers raising a toast to the new abnormal.