One in five small business owners plans to add staff in the next three months, the strongest hiring appetite since October 2022. The problem is there’s almost nobody to hire.
The National Federation of Independent Business (NFIB) reported on August 11 that its Small Business Optimism Index rose 2.4 points in July to 99.8, pushing above its 52-year average of 98.0 for the first time since August 2025. Eight of the index’s 10 components improved, with hiring plans contributing the most to the gain.
A seasonally adjusted net 20% of owners now plan to create new jobs, a 9-point jump from June that sits 9 points above the historical average. That is the single largest one-month jump in the hiring-plans component in years.
The workers aren’t showing up
In the same survey, 36% of owners reported job openings they could not fill, up 4 points from June and the highest share since June 2025. The gap is worst in skilled positions, with 31% of owners looking for skilled workers versus just 14% searching for unskilled labor.
NFIB Chief Economist Bill Dunkelberg put it plainly. “Hiring plans suggest that small business owners are expecting a surge in business that will require more workers,” he said in the July Jobs Report.
Twenty-seven percent of owners now name labor quality or availability as their single most important problem, an 8-point spike from June and 15 points above the long-run average. That vaulted it past inflation, taxes, and every other concern on the NFIB survey.
What small businesses should watch
The broader labor market is tightening from both directions. BLS data for July showed nonfarm payrolls fell by 23,000 jobs, while labor force participation dropped to 61.4%, its lowest level in more than five years. Fewer people are entering the workforce just as small employers want to add headcount.
Wage pressure is building. A net 31% of owners reported raising compensation in July, up 3 points, and 19% plan to raise pay further in the next quarter. Both readings are above their historical averages. For owners already working on tight margins, that squeeze between hiring ambitions and scarce talent could slow expansion and raise costs for customers.
Businesses that need to fill skilled roles should consider broadening their candidate pipelines through apprenticeships, on-the-job training, or faster hiring cycles. Waiting for the “perfect” applicant is an increasingly expensive strategy when 85% of those trying to hire report few or no qualified candidates walking in the door.
The next NFIB Optimism Index, covering August, is expected in mid-September. It will show whether hiring ambitions held up or whether the talent shortage started pulling optimism back down.
