While the overall market remains in balance, employers need more skilled workers to fill open positions. Designed by Freepik

SACRAMENTO, CA (MPG) - The National Federation of Independent Business (NFIB), monthly Jobs Report released March 5 showed that the Small Business Employment Index ticked up nearly 1 point to 103.5, a 2.3-point increase above the 2025 average of 101.2, and 3.5 points above the historical average of 100.

“Glad to see the positive national numbers holding. Although our Jobs Report is not broken down by state, our new state-specific Small Business Economic Trends report is, and it shows optimism among small business owners here below the national average. This has to change. We recommended some policy changes the Legislature can take to get California back on track and this week released a poll of our California small-business-owning members,” said NFIB California State Director John Kabateck.

NFIB’s Jobs Report is a national survey of NFIB-member small-business owners, not broken down by state. The NFIB Small Business Employment Index is a new measure of the current state of the small business labor market. The Index integrates actual and planned changes in employment and employee compensation into a singular data point. A higher Index reflects an overall tighter labor market; a lower Index reflects an overall weaker labor market.

“February’s numbers show a growing tightness in the small business labor market. While the overall market remains in balance, employers need more skilled workers to fill open positions,” said NFIB Chief Economist Bill Dunkelberg.

Highlights from the Latest NFIB Jobs Report include the following.

A seasonally adjusted net 12% of owners plan to create new jobs in the next three months, down 4 points from January and the lowest level since May 2025. Despite the decrease, hiring plans are close to their average of a net 11%.

In February, 15% of small business owners cited labor quality as their single most important problem, down 1 point from January and the fourth consecutive monthly decline. The last time labor quality, reported as the single most important problem, was this low was in April 2020. Labor costs, reported as the single most important problem by small business owners, remained at 9%.

Seasonally adjusted, a net 34% of small business owners reported raising compensation in February, up 2 points from January and the highest level since March 2025. A net 22% (seasonally adjusted) plan to raise compensation in the next three months, unchanged from January.

Keep up with the latest California small business news at www.nfib.com. Follow us on X @NFIB_CA and on Facebook @NFIB.CA.

For over 80 years, NFIB has been advocating on behalf of America’s small and independent business owners, both in Washington, D.C., and in all 50 state capitals. NFIB is a nonprofit, nonpartisan, and member-driven association. Since our founding in 1943, NFIB has been exclusively dedicated to small and independent businesses and remains so today. For more information, visit nfib.com.