Small business owners reported an adjusted average employment increase of 0.21 workers per firm, which NFIB Chief Economist William Dunkelberg calls “a solid performance.” Even more encouraging are the plans for future hiring at the nation’s small firms.
“A seasonally adjusted net 19 percent plan to create new jobs, up 4 points and the highest reading since December 1999,” reports Mr. Dunkelberg.
It seems that small business owners are just as optimistic as the owners of larger businesses, who pushed the Dow Jones Industrial Average above the 22,000 mark for the first time on Wednesday.
But will the high hopes be fulfilled? As much as the owners of small firms want to hire, it’s not clear they’ll be able to find enough workers. “Thirty-five percent of all owners reported job openings they could not fill in the current period, up 5 points, and the highest reading since November 2001,” according to the forthcoming NFIB report.
This is good news for the workers who do show up, because firms are having to raise salaries. NFIB finds that a net 27% of survey respondents raised worker compensation in July, up three percentage points from June. Looking forward to Friday’s Department of Labor report on employment across the economy, Mr. Dunkelberg predicts, “Job creation in July should be solid, 190,000 or better, and it could be stronger if owners were better able to match job openings with available labor supply.”
Given the difficulty of finding potential employees, this would seem to be an especially bad time to reduce legal immigration, as President Trump proposed on Wednesday.
On the bright side, today’s hiring report and a booming stock market affirm that the owners of businesses both large and small have great expectations for the U.S. economy. This column continues to believe that meeting those expectations will require Republican majorities in Congress to finally put significant pro-growth legislation on Mr. Trump’s desk. But the optimism expressed in the latest NFIB survey is welcome in an economy still struggling to break out of the slow-growth pattern of the last decade.
This article originally appeared in The Wall Street Journal on August 3, 2017