Small businesses that have struggled to attract talent in recent years may enjoy a bit of a reprieve as wage growth eases.
Amid the white-hot labor market over these past few years, many American small businesses struggled to keep up with larger companies that could afford to shell out more for labor. According to Holly Wade, executive director of NFIB's research center, "Many of them [small businesses] are still experiencing lost sales opportunities because they're not staffed as they want to be."
As of September 2023, businesses with one to nine employees accounted for roughly 21 percent of all job openings. This marked a 20 percent increase over the prior year and accounted for the highest share of openings ever recorded for such small businesses. The data illustrates just how ready they are to hire and tap into opportunities, while also suggesting that they may have been struggling to fill openings. In total, 61 percent of small-business owners reported either hiring or trying to hire someone in October 2023. Job openings in larger firms, meanwhile, actually contracted in September.
Applications for employee identification numbers, a key indicator of how many businesses are being started, increased to near record highs in 2023, trailing only 2021, when the COVID-19 pandemic fueled a large surge in small businesses entering the market. Back then, many businesses closed their doors either temporarily or for good. This resulted in many people setting up new businesses and created opportunities for things like delivered meals and drinks.
If small businesses can tap into more talent amid slowing wage growth, it might fuel another boom. The Bureau of Labor Statistics reports that wages grew by just .2 percent in September 2023 from a month prior and only 4.2 percent from a year prior. Slowing wage growth may also ease inflation, which has hit cash-tight small businesses.
