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America’s Amazing Job Market

The NFIB March survey shows small businesses hiring at close to a record pace.

By 

James Freeman

April 4, 2019 12:43 p.m. ET

Contractors work at a Nashville construction site this week. The March NFIB jobs report shows open positions at 57% of construction firms participating in the survey. 

U.S. small businesses continued their aggressive hunt for new workers and added employees at a near-record pace in March. That’s according to the latest employment report from the National Federation of Independent Business, due out later today.

“Job creation was solid in March with a net addition of 0.50 workers per firm (including those making no change in employment), close to February’s record of 0.52, and up from 0.33 in January,” reports NFIB Chief Economist William Dunkelberg. “Owners are trying to hold on to the employees that they have due to a highly competitive labor market,” he adds.

As in recent months, small firms are hiring a lot, but not as much as they’d like. According to Mr. Dunkelberg:

Sixty percent reported hiring or trying to hire (up 3 points), but 54 percent (90 percent of those hiring or trying to hire) reported few or no qualified applicants for the positions they were trying to fill (up 5 points). “Qualified” includes having position-appropriate skills but also encompasses... appearance, attitude, social skills... wage expectations, and work history. Twenty-one percent of owners cited the difficulty of finding qualified workers as their Single Most Important Business Problem, only 4 points below the record high.

Economics says that to solve a worker shortage, businesses of all sizes will have to start meeting more of those wage expectations. Adds the NFIB chief economist:

Wage costs are rising as owners must pay more to attract and retain needed workers from a well-picked over pool of potential applicants. A net 33 percent reported higher compensation in March, up 2 points. Twenty percent (net) planned increases in the next few months (up 2 points), a good leading indicator of future compensation gains.

Also encouraging in this latest NFIB survey is that owners report robust hiring plans. But Mr. Dunkelberg warns that fulfilling them may require more than wage increases:

In construction for example, only 6 percent complain about the cost of labor but 34 percent lament about the lack of qualified workers.

Still, he notes that the “strength in hiring plans and the record-high levels of job openings” add up to a “positive indicator for economic growth. Hiring a worker is an investment. The widespread willingness of small business owners to increase employment indicates that they see an economy that will be solid enough to deliver a return on their labor investment.”

For employment across the economy as a whole, investors and workers will be watching Friday’s Labor Department report for March after a disappointing February increase of just 20,000 jobs.

Also, next week will bring the latest government report on total open positions in the U.S. economy. The  last report showed a new record high of 7.6 million job openings in January--compared to 6.5 million Americans classified as unemployed.

A year ago this column called it the best time ever to look for a job. The data since then—including today’s NFIB report—show that it’s lately become even more of a seller’s market for labor and strongly suggest that workers can expect rising wages.