Small Business Hiring Slows as Worker Shortages Persist
Hiring activity among small businesses slowed in September as employers continue to struggle to find qualified workers, according to the latest jobs report from the National Federation of Independent Business (NFIB).
NFIB found that 51% of small business owners reported hiring or trying to hire in September, down 5 points from August. Forty-five percent of owners, or 87% of those hiring or trying to hire, reported few or no qualified applicants for the positions they were trying to fill. Twenty-five percent reported few qualified applicants, and 20% reported none.
“Overall employment conditions are softening, though the small business labor market is still tighter than normal,” NFIB Chief Economist Bill Dunkelberg said. “Between the ongoing difficulty of finding qualified workers and elevated operation costs, employers are proceeding more cautiously as they look to make hiring decisions.”
The share of owners who named “labor quality or availability” as their single most important operating problem rose 3 points from August to 26%. That is 14 points above the historical average of 12%. That concern is supported by actual hiring experiences. A seasonally adjusted 32% of owners reported job openings they could not fill, down 3 points from August but 8 points above the historical average. Twenty-seven percent have openings for skilled workers, down 4 points, while 16% have openings for unskilled labor, up 3 points. A seasonally adjusted net 17% of owners plan to create new jobs in the next three months, unchanged from August.
The persistent hiring challenges were reflected by a slight decline in the NFIB Small Business Employment Index, which measures the current state of the small business labor market. The index dropped 1.2 points in September to 100.6, falling below the 2025 average of 101.2 but remaining above the historical average of 100.0.
Competition for qualified employees appears to be driving an uptick in compensation. Although the number of owners who reported wage increases in September declined 3 points to 28%, a net 20% plan to raise compensation in the next three months. Both measures remain above their historical averages.
Despite higher wages, overall concerns about employee costs eased. Six percent of owners cited labor costs as their single most important problem, down 1 point from August and the lowest level since December 2020.
NFIB’s report suggests that employers are proceeding cautiously amid unpredictable demand and elevated operating costs, while the shortage of qualified applicants continues to limit firms looking to expand. Employment growth is likely to remain modest in the near term, with both employer caution and labor availability shaping hiring decisions, the association said.
The report is based on 411 responses to NFIB’s September survey of a random sample of its member firms, conducted through Sept. 28.