WASHINGTON — America’s small businesses are accelerating hiring at one of the fastest paces in years, but a persistent shortage of qualified workers is limiting how far that momentum can go, with owners across the country increasingly saying their biggest constraint is not demand, but finding people capable of doing the job.
New payroll data from Gusto shows small businesses added an estimated 119,400 net jobs in March 2026, marking the strongest monthly gain since 2022 and nearly double the 49,900 jobs added in March 2025. The hiring surge was broad-based, spanning 18 of 19 industry sectors and all four U.S. regions, signaling that demand for labor remains resilient despite ongoing economic uncertainty.
Sector-level gains were led by healthcare, which added 24,200 jobs, followed by accommodation and food services at 17,400, and retail trade with 12,800 new positions, according to Gusto’s labor market report. The data underscores that consumer-facing industries and essential services continue to drive hiring demand across the small business ecosystem.
Much of that growth is being powered by the smallest employers. Businesses with fewer than 20 employees created more than 525,000 jobs in 2025, outperforming all other employer size categories, and added roughly 200,000 additional jobs in the first quarter of 2026 alone, reinforcing their outsized role in the U.S. labor market.
Yet beneath the strong hiring numbers lies a structural challenge that continues to weigh on growth. The National Federation of Independent Business (NFIB) reports that 32% of small business owners had job openings they could not fill in March — well above the historical average of 24%. Among those actively hiring, 87% said they received few or no qualified applicants, highlighting a deep mismatch between job openings and workforce readiness.
NFIB Chief Economist Bill Dunkelberg said the issue is not a lack of willingness to hire, but persistent constraints tied to both labor costs and worker quality. “Small business owners remain eager to expand their workforce,” Dunkelberg noted, “but the ongoing shortage of qualified applicants continues to limit their ability to fully capitalize on demand.”
The strain is also visible in wage data. According to the U.S. Bureau of Labor Statistics, average hourly earnings for private-sector workers reached $37.38 in March 2026, up 3.5% year over year. Despite rising compensation, employers say higher pay alone is not enough to solve the hiring gap.
Instead, the problem is increasingly centered on skills. Hiring managers point to shortages in systems management, decision-making, and complex problem-solving abilities — capabilities that are difficult to train quickly and remain in short supply across the labor pool.
That gap is pushing businesses to rethink workforce development strategies, with AI training emerging as a critical priority. Surveys show 83% of job seekers and 86% of hiring managers believe formal AI training should be a central focus for companies looking to attract and retain talent.
Bob Funk Jr., CEO of Express Employment International, said many companies have invested heavily in technology but have lagged in equipping workers to use it effectively. “Businesses have done a good job implementing new tools,” Funk said, “but there’s a growing realization that without proper training, the productivity gains simply don’t materialize.”
For small business owners, the contrast is stark. On paper, hiring is strong and demand remains healthy. But on the ground, the reality is more complicated — job postings stay open longer, productivity is constrained, and growth opportunities are delayed by an inability to fully staff operations.
The result is a labor market that appears robust at the headline level but remains structurally tight where it matters most: skills.
Looking ahead, economists say the trajectory of small business growth will depend less on demand conditions and more on whether the workforce can adapt — through training, education, and reskilling — to meet evolving employer needs. Without that shift, the current hiring momentum risks hitting a ceiling, even as opportunities continue to expand.
JBizNews Desk
