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Last month this column noted that fewer of America’s small companies were planning to hand out raises, according to the March employer survey from the National Federation of Independent Business. In April business owners seem to have made good on that prediction about limiting pay hikes, even as they had a slightly harder time filling open positions. Shouldn’t a worker shortage force companies to offer higher wages? One would normally think so—and workers obviously hope so—but the silver lining for consumers in
restrained compensation is that it makes it easier for companies to avoid raising prices on the goods and services they sell. One intriguing possibility raised by the April NFIB survey results, due out later today, is that the American economy is heading toward a sweet spot of plentiful job opportunities and moderating inflation. The NFIB Small Business Employment Index, which integrates actual and planned changes in employment and compensation into a single data point, has ticked down to a level just a little better than normal. NFIB Chief Economist William Dunkelberg reports: The Employment Index fell in April, from 101.6 to 100.4. This is the second consecutive month that the Index declined. The current reading is now below the 2025 average of 101.2, but slightly above the historical average of 100.0. This decline is indicative of further weakness in the labor market. The weakness seems to be coming mainly from fewer owners planning to raise worker pay. Mr. Dunkelberg notes:
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