2023 Small Business Challenges: Inflation and Labor Shortages Impact Growth and Hiring Costs
Explore how small businesses in 2023 are facing persistent inflation and labor shortages, leading to decreased optimism and increased operational costs.
In October 2023, small business confidence continued to decline as inflation and labor shortages create significant hurdles for growth and hiring.
The National Federation of Independent Business (NFIB) reported a drop in its Small Business Optimism Index by 0.8 points to 91.3, marking the 10th consecutive month below the 49-year average of 98. This ongoing trend highlights the mounting challenges small business owners face amid rising prices and workforce scarcity.
Inflation remains the top concern for 33% of small business owners, rising by three percentage points since September. Consequently, half of all small businesses have increased their prices to cope with higher costs. Meanwhile, expectations for sales growth have declined, with a net negative 13% of owners anticipating higher sales, down three points from the previous month.
Labor shortages persist as nearly 46% of owners report difficulty filling job openings, consistent with September's figures. Among those hiring, 90% struggle to find qualified candidates, intensifying recruitment challenges.
To attract and retain workers, 44% of respondents have raised wages, and an additional 32% plan to increase pay within the next three months—an increase of nine points since September and the highest level since October 2021. Labor costs and quality remain critical concerns, cited by 10% and 23% of owners respectively as their primary business issues.
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