Fourteen percent of business owners reported labor costs as their single most important problem. Designed by Magnific

SACRAMENTO REGION, CA (MPG) – The latest monthly Jobs Report from the National Federation of Independent Business (NFIB) shows the Small Business Employment Index remaining essentially flat, registering 100.3 in May after measuring 100.4 in April. This is the third consecutive month the Index declined. The current reading is now below the 2025 average of 101.2, but still slightly above the historical average of 100.0.

NFIB California State Director John Kabateck said, “One month’s dip in the Small Business Employment Index is no reason to be alarmed, but three consecutive months of slippage does raise concerns. To help reverse this trend, it would be nice to see the California Legislature do its part by passing small-business-helpful policies, such as Assembly Bill 649 and Senate Bill 84. Its treatment of them, however, shows fat chance of that happening. Meanwhile, Congress can build on the success it had in making the 20% Small Business Deduction permanent by permanently repealing the unconstitutional beneficial ownership reporting mandate.”

NFIB Chief Economist Bill Dunkelberg said, “Labor costs increased significantly to the highest reading in the survey’s history. Small business owners are facing mounting pressure to retain workers, and many firms are navigating costly new state mandates. While current conditions restrict Main Street’s already-thin profit margins, compensation measures remain steady for now.”

Highlights from the Latest NFIB Jobs Report

Labor costs increased to the highest reading in history for the survey’s question about business challenges. Fourteen percent of business owners reported labor costs as their single most important problem, up 5 points from April.

A seasonally adjusted net 9% of owners plan to create new jobs in the next three months, down 4 points from April and marking the lowest level since May 2020.

Plans to hire are now below its historical average of a net 11%.

In May, 13% of small business owners cited labor quality as their single most important problem, down 5 points from April and marking the lowest level since December 2016.