Small business job growth continued in December, but the gains remain uneven as certain sectors of the economy are slowing due to state-mandated business closures and consumer resistance to spend, according to NFIB’s monthly jobs report.

“Small businesses continued to prove that they are the engine of the economy as we closed a chapter on a challenging year,” said NFIB Chief Economist Bill Dunkelberg. “Owners continue to manage various obstacles related to the COVID-19 pandemic but are doing their best to remain open and continue hiring employees.”

State-specific data is unavailable, but NFIB State Director Dawn Starns said, “One thing that would help encourage job growth in Mississippi in the coming year would be for lawmakers to approve a plan to eliminate the state income tax,” Starns said. Small businesses are typically organized as pass-through entities, meaning they pay income taxes at the individual rate rather than the higher corporate rate, she said.

“Reducing the tax burden on small business owners would make it easier for them to reinvest in their businesses and hire more people,” Starns said.

Small businesses increased employment by 0.3 workers per firm on average over the past few months, an increase of 0.14 workers per firm compared to November’s reading.

Owners are still looking to hire as they reported a historically high level of job openings in December. Thirty-two percent (seasonally adjusted) of owners reported job openings they could not fill in the current period, down 2 points from November. Twenty-seven percent have openings for skilled workers and 11% have openings for unskilled labor.

Small business employers plan to fill their open positions with a net 17% (seasonally adjusted) reporting they are planning to create new jobs in the next three months, a historically strong reading. Overall, 54% reported hiring or trying to hire in December.

However, many owners are having trouble finding qualified employees for their open positions. Eighty-nine percent of those hiring or trying to hire reported few or no qualified applicants for the positions they were trying to fill in December. Down one point from November, 26% of owners reported few qualified applicants for their open positions and 22% reported none (up two points).

Forty-seven percent of the job openings in the construction industry are for skilled workers. Fifty-nine percent of construction firms reported few or no qualified applicants and 33% cited the shortage of qualified labor as their top business problem.

A net 21% (seasonally adjusted) reported raising compensation and a net 14% plan to do so in the coming months. Six percent of owners cited labor costs as their top business problem and 21% said that labor quality was their top business problem.

Click here to view the full jobs report.