BOSTON, Mass.— Small business hiring slowed in September as employers reported fewer hiring efforts and continued concerns about finding qualified workers, according to the latest jobs report from the National Federation of Independent Business (NFIB).
The report shows that while demand for workers remains above historical levels, small business owners are becoming more cautious about adding to their payrolls as the labor market softens and operating costs remain a concern.
A seasonally adjusted 32% of small business owners reported job openings they could not fill in September, down three percentage points from August but still eight points above the historical average.
“There are still a lot of small businesses looking to hire right now, but the percentage of employers telling us ‘labor quality or availability’ is their top problem is more than double the historical average,” said NFIB State Director Christopher Carlozzi.
Carlozzi said the national findings reflect challenges facing small businesses in Massachusetts, where employers face comparatively high costs associated with adding workers.
“Small business owners still want to hire, but they’re thinking carefully about when to bring someone on,” he said. “Especially in a high-cost state like Massachusetts, where adding just one more person to the payroll means paying some of the highest unemployment insurance taxes and healthcare expenses in the nation.”
Hiring Activity Declines
The Small Business Employment Index, which tracks conditions in the small business labor market, fell 1.2 points to 100.6 in September. The reading was below the 2025 average of 101.2 but remained above the historical average of 100.0.
Overall, 51% of small business owners said they hired or tried to hire workers in September, down five percentage points from August.
Among those businesses hiring or attempting to hire, 45% reported that they received few or no qualified applicants. That represents 87% of owners who were actively hiring or trying to hire.
Specifically, 25% reported receiving few qualified applicants, while another 20% said they received no qualified applicants for the positions they were seeking to fill.
The demand for skilled workers remained particularly significant. Twenty-seven percent of small business owners reported openings for skilled workers, down four points from August, while 16% reported openings for unskilled labor, an increase of three points.
Despite the slowdown in current hiring activity, future employment plans remained steady. A seasonally adjusted net 17% of owners said they plan to create new jobs over the next three months, unchanged from August.
Labor Quality Remains a Major Concern
The availability and quality of workers continued to rank among the biggest challenges facing small businesses.
In September, 26% of owners identified labor quality or availability as their top operating problem, an increase of three percentage points from August and 14 points above the historical average of 12%.
At the same time, concerns about labor costs eased slightly. Six percent of small business owners identified labor costs as their single most important business problem, down one point from August and the lowest reading since December 2020.
The findings suggest that while businesses continue to face challenges finding workers with the skills they need, direct concerns about the cost of labor have moderated.
Compensation Pressures Ease
Compensation trends also showed some moderation in September.
On a seasonally adjusted basis, a net 28% of small business owners reported raising compensation, down three percentage points from August.
However, expectations for future wage increases moved higher. A seasonally adjusted net 20% of owners said they plan to raise compensation over the next three months, up two points from August.
The combination of slower hiring, persistent difficulty finding qualified applicants and continued plans for compensation increases reflects a labor market in transition. Small businesses remain interested in hiring, but many owners appear to be taking a more measured approach as economic and operating pressures evolve.
