Another Great Jobs Report The latest NFIB survey shows U.S. small firms hiring more and paying more. By James Freeman
https://www.wsj.com/articles/another-great-jobs-report-11559839362
What will it take to stop the U.S. jobs machine? Data on capital expenditures and manufacturing are flashing warning signals, while rising tariffs threaten growth. But U.S. small firms in May continued to raise pay, add workers and make plans to hire even more. That’s the encouraging news in the latest monthly employment survey from the National Federation of Independent Business, due out later today.
NFIB Chief Economist William Dunkelberg reports that job creation among the small employers in the survey “remained strong in May,” matching the April reading of a net addition of 0.32 workers per firm. He notes that demand for workers continues to outpace supply at small companies:
Sixty-two percent reported hiring or trying to hire (up 5 points), but 54 percent (up 5 points) reported few or no qualified applicants for the positions they were trying to fill. “Qualified” includes having position-appropriate skills but also encompasses appearance, attitude, social skills, [reasonable] wage expectations and work history. Twenty-five percent of all owners cited the difficulty of finding qualified workers as their Single Most Important Business Problem, equaling the record high.
Employees and employers are bound to have different opinions when it comes to the definition of reasonable wage expectations. Regardless, the tight labor market is forcing employers to pay up for talent. According to Mr. Dunkelberg:
Reports of higher worker compensation were unchanged at a lofty net 34 percent of all firms. Plans to raise compensation posted a 4 point gain to a net 24 percent. Overall, reports of rising compensation are holding at historically high levels.
In Washington, Federal Reserve officials are contemplating an interest-rate cut. Meanwhile economists on Wall Street are also increasingly nervous about trade disputes and slowing global growth. But on Main Street, small business owners are still in hiring mode, according to NFIB:
A seasonally-adjusted net 21 percent plan to create new jobs, up 1 point… Forty-eight percent in construction plan to increase employment, only 3 percent plan reductions. Plans are also strong in manufacturing, transportation and non-professional services. Few owners are reducing employment, indicating that initial claims for unemployment will remain historically low.
Putting the cherry on this latest employment sundae, Mr. Dunkelberg says that recent productivity gains are allowing business owners to raise wages without raising prices on consumers.
There’s no guarantee that Friday’s Bureau of Labor Statistics report covering the whole economy will be as positive as the new NFIB data on hiring at small firms. But on the question of whether U.S. workers are getting more done and justifying higher pay, a separate report out this morning says yes:
Nonfarm business sector labor productivity increased 3.4 percent in the first quarter of 2019, the U.S. Bureau of Labor Statistics reported today, as output increased 3.9 percent and hours worked increased 0.5 percent… From the first quarter of 2018 to the first quarter of 2019, productivity increased 2.4 percent… The four-quarter increase in productivity is the largest since a 2.7-percent gain in the third quarter of 2010.
Despite threats to prosperity, workers still enjoy historic opportunities in the U.S. job market.
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