By Natalie Mojica
According to the National Federation of Independent Business, 50% of small-business owners raised wages in January to attract skilled workers. The findings reflect a major trend of the pandemic economy, as, over the last year, workers’ hourly pay has increased 5.7%, according to the Bureau of Labor Statistics.
More than 25% of small businesses plan to continue raising compensation over the next three months since 47% of small business owners have been unable to fill job openings.
Bill Dunkelberg, the National Federation of Independent Business’ chief economist, was unsurprised by the news.
“Small-business owners are managing the reality that the number of job openings exceeds the number of unemployed workers, producing a tight labor market and adding pressure on wage levels,” he said in a statement. “Reports of owners raising compensation continues at record-high levels to attract applicants to their open positions.”
One of the most significant issues for small business owners has become labor quality. 23% of owners felt that labor quality was their primary business concern, and 93% of small businesses hiring throughout January found few or unqualified workers for the job.
As Fortune reported, the U.S. is still short approximately 5 million pre-pandemic jobs. Experts like Lauren Melodia, deputy director of macroeconomic analysis at the Roosevelt Institute, insist that this is because people are demanding more from their jobs than just better pay.
“People want overall better working conditions. They need things like affordable childcare, paid sick leave, stable work schedules, and high workplace safety and health standards,” Melodia said.
Time reported that the industries with the highest pay increase were professional business services (legal, accounting, consulting), the information technology sector, construction, and manufacturing. Construction workers had an average increase of 6.1% in their wages, while new hires started at an average growth of 4.7%.
Other industries, like leisure and hospitality services and trade and transportation, didn’t see much change in their pay, and new hires from the latter reported only a 1.6% decrease in wages.
For the most part, the tight labor market favors workers to negotiate for raises now more than ever and wait for their purchasing power to rise as inflation subsides.