Labor quality becomes top issue for small businesses, independents’ group says

By Editor | July 20, 2023

The National Federation of Independent Businesses’ Small Business Optimism Index decreased by 1.1 points in April to 89, marking the 16th consecutive month below the survey’s 49-year history of 98.
Labor quality was the top business problem at 24 percent, with inflation in second place by one point at 23 percent.
“Optimism is not improving on Main Street as more owners struggle with finding qualified workers for their open positions,” NFIB Chief Economist Bill Dunkelberg said. “Inflation remains a top concern for small businesses but is showing signs of easing.”
Although state-specific data is unavailable, NFIB State Director Annie Spilman noted that regulatory and tax relief would help shore up Texas entrepreneurs’ optimism.
“With job creators struggling to fill open positions while battling rising prices, now more than ever, they need relief,” Spilman said. “But small business owners can’t afford a legislative session without tax relief as well. We’ll continue working with lawmakers to make both regulatory and tax relief a reality.”
The frequency of reports of positive profit trends was a net negative 23%, five points worse than March.
A net negative 5% of owners viewed current inventory stocks as “too low” in April, down six points from March. This suggests stocks are now too large relative to expected sales, the organization reported.
The net percent of owners raising average selling prices decreased four points to a net 33% (seasonally adjusted).
The net percent of owners who expect real sales to be higher deteriorated four points from March to a net negative 19%.
As reported in NFIB’s monthly jobs report, owners’ plans to fill open positions remain elevated, with a seasonally adjusted net 17% planning to create new jobs in the next three months. Seasonally adjusted, a net 40% reported raising compensation. A net 21% plan to raise compensation in the next three months. Nine percent cited labor costs as their top business problem and 24% said that labor quality was their top business problem.
Fifty-six percent of owners reported capital outlays in the last six months, down one point from March. Of those making expenditures, 40% reported spending on new equipment, 23% acquired vehicles, and 11% spent money on new fixtures and furniture. Fifteen percent improved or expanded facilities and 6% acquired new buildings or land for expansion. Nineteen percent of owners plan capital outlays in the next few months, down one point from March and historically very weak.
Two percent of owners reported that all their borrowing needs were not satisfied. Thirty percent of owners reported all credit needs were met and 59% said they were not interested in a loan. A net 6% reported their last loan was harder to get than in previous attempts, down three points. Four percent reported that financing was their top business problem. A net 26% of owners reported paying a higher rate on their most recent loan.
The NFIB Research Center has collected Small Business Economic Trends data with quarterly surveys since the fourth quarter of 1973 and monthly surveys since 1986. Survey respondents are randomly drawn from NFIB’s membership. The report is released on the second Tuesday of each month.