Full Breakdown
Small Business Employment Index Shows Tightening Labor Market
3/7/2026, 11:56:08 AM
Overview of the Employment Landscape
The National Federation of Independent Business (NFIB) released its February Jobs Report on March 5, 2026, indicating a slight increase in the Small Business Employment Index, which rose nearly 1 point to 103.5. This figure reflects a tightening labor market, following a consolidation of gains observed in January. The current index is 2.3 points above the 2025 average of 101.2 and 3.5 points above the historical average of 100.
Key Findings from the February Jobs Report
In February, 33% of small business owners reported unfilled job openings, an increase of 2 points from January. This percentage remains significantly above the historical average of 24%. Specifically, 28% of businesses have openings for skilled workers, up 3 points, while 10% have openings for unskilled labor, which remained unchanged. Chief Economist Bill Dunkelberg noted, “February’s numbers show a growing tightness in the small business labor market,” emphasizing the need for more skilled workers.
Despite the tight labor market, a seasonally adjusted net of 12% of owners plan to create new jobs in the next three months, marking a decrease of 4 points from January and the lowest level since May 2025. However, this figure is close to the average of a net 11%. Overall, 54% of owners reported hiring or attempting to hire in February, an increase of 4 points from the previous month.
Challenges in Recruitment
A significant challenge persists in the recruitment process, with 46% of owners (85% of those hiring) reporting few or no qualified applicants for the positions they were trying to fill. Specifically, 25% reported having few qualified applicants, while 21% indicated they had none, both figures reflecting an increase in difficulty compared to January.
Labor quality has been cited as the single most important problem by 15% of small business owners, a decrease of 1 point from January and the lowest level since April 2020. In contrast, labor costs remain a concern for 9% of owners.
Compensation Trends
In response to the labor market conditions, a seasonally adjusted net of 34% of small business owners reported raising compensation in February, which is the highest level since March 2025 and an increase of 2 points from January. Additionally, 22% of owners plan to raise compensation in the next three months, remaining unchanged from the previous month.
Conclusion
The NFIB has been advocating for small and independent business owners for over 80 years, emphasizing the unique challenges they face in the current labor market. As the Small Business Employment Index indicates ongoing tightness, the need for skilled labor and effective recruitment strategies remains critical for small businesses across the United States. For further information, visit nfib.com.
