Everything small businesses are saying continues to point to higher wages
The October NFIB report showed that 21% of firms reported an increase to compensation, slightly down from September's 23%. Still, this number has been trending upward since the financial crisis.
Furthermore, a seasonally-adjusted net 17% plan to raise compensation in the coming months, a one percent increase from September, which is "still strong for this recovery," according to the report. This number, too, has been trending higher over the last few years.
In the wake of the financial crisis, sales was by far the single most important concern for small businesses, but that has seen a huge drop in the last couple of years with the economy improving. Now, there is a larger percentage of firms whose single most important problem is "labor quality" than those whose biggest problem is "sales."And that's important as the change toward labor quality becoming the most important problem for more employers suggests that economic concerns are shifting from weak demand to tight supply.
In fact, 48% of respondents reported "few or no qualified applications" for the positions they were trying to fill, up from September's 45%. This number that has hovered in the mid-to-upper 40's since May 2014, and has been trending higher since 2009.
All together, these aforementioned factors suggest that American workers should be seeing higher wages soon.
Notably, the latest jobs report on last Friday suggested that we might finally be at that point: Average hourly earnings grew 2.5% from October 2014 to October 2015 - the highest growth rate since the recession.
