The National Federation of Independent Business (NFIB) has introduced its new Small Business Employment Index as part of its January Jobs Report. The index combines data on actual and planned changes in employment and employee compensation to provide a single measure of the small business labor market.
According to NFIB South Dakota State Director Jason Glodt, “The December rise in optimism was a great way to end the year, but the new Employment Index reminds us that the labor market remains tight. In South Dakota, small businesses are still facing significant labor shortages that threaten their ability to keep their doors open. This Index shows lawmakers that regulatory reform and tax relief are necessities for a healthy jobs market.”
Chief Economist Bill Dunkelberg added, “Main Street continues to search for qualified workers for open positions. Owners reported increased wages over the last three months, alongside plans to increase them in the next three months as well.”
The report notes that the Employment Index dropped nearly one point in January to 101.6, which erases about half of December’s gain when it reached its highest level since March 2025. Despite this decrease, the index remains above its historical average of 100 and slightly higher than last year’s average of 101.2.
In January, 31% of small business owners reported job openings they could not fill—a decrease from December but still above the historical average of 24%. Openings for skilled workers declined by three points to 25%, while unskilled labor openings remained unchanged at 10%.
A seasonally adjusted net 16% of owners plan to create new jobs in the next three months, down one point from December. Additionally, half of all owners reported hiring or trying to hire during January—the lowest level since May 2020—with many reporting difficulty finding qualified applicants.
Labor quality continued to be cited as a key concern among small business owners but saw a decline for the third consecutive month; only 16% identified it as their most important problem in January. The construction industry reported this issue most frequently at 30%, while just 2% in finance considered it their top concern.
On compensation trends, a net 32% of owners raised pay in January—up one point from December—and a net 22% plan further increases over the next quarter.
For more details on these findings and additional statistics from NFIB’s latest report, readers can view the full NFIB Jobs Report by following this link: here.
