One-Third of Small Businesses Can't Fill Open Positions

The latest NFIB data reveals that 33% of small business owners have unfilled job openings - nearly 40% higher than the historical average of 24%. For Long Island employers already struggling with the region's high cost of living and competition from New York City, this persistent labor shortage is driving up operational costs and forcing difficult decisions about growth and capacity.

The December 2025 report shows this problem isn't improving - the percentage remained unchanged from November, indicating that traditional recruitment strategies are failing to address the fundamental mismatch between available workers and open positions. For Nassau and Suffolk County businesses, this translates directly to lost revenue and increased expenses.

Small Business Trends reports that businesses are paying significantly more to attract candidates, with many offering signing bonuses and above-market wages just to fill basic positions. A dental practice with three unfilled positions could be losing $50,000 to $75,000 annually in potential revenue while paying overtime to existing staff.

The Real Cost of Empty Positions

Unfilled positions don't just represent missed opportunities - they create a cascade of additional expenses that many business owners underestimate. Existing employees work overtime at premium rates, productivity declines due to understaffing, and businesses may need to turn away clients or delay projects due to capacity constraints.

Construction and transportation companies face particularly acute challenges finding skilled workers. According to Marketplace reporting, these industries are struggling with workers who have specific skillsets, and recent tariff pressures have added additional strain to the labor market.

Professional service firms across Long Island - medical practices, accounting offices, and law firms - are competing not just with each other but with New York City employers who can often offer higher salaries. The region's limited affordable housing and transportation challenges make it even harder to attract workers who might consider commuting from less expensive areas.

For a 15-employee accounting firm with two unfilled positions, the annual cost impact could include: $15,000-20,000 in overtime for existing staff, $8,000-12,000 in recruitment expenses, and potentially $25,000-40,000 in lost revenue from clients they can't serve adequately.

Why Traditional Recruitment Isn't Working

The labor shortage isn't just about unemployment rates - it's about a fundamental mismatch between what employers offer and what workers need. Long Island's high cost of living means that even competitive salaries may not provide adequate purchasing power for housing, transportation, and other necessities.

Many small businesses are discovering that job seekers prioritize factors beyond salary: flexible schedules, remote work options where possible, professional development opportunities, and comprehensive benefits packages. However, implementing these changes requires strategic HR consulting to develop competitive recruitment and retention strategies that work within small business budgets and operational constraints.

The challenge is particularly acute for businesses that require on-site work - healthcare practices, skilled trades, and service companies can't offer remote work as an incentive. These employers must find other ways to differentiate their opportunities in a competitive market.

What's Working for Successful Employers

Despite the challenging environment, some Long Island businesses are successfully filling positions by adapting their approach to current market realities. Bank of America research shows that 19% of small businesses plan to create new jobs in the next three months - the highest percentage in nearly a year, indicating optimism despite ongoing challenges.

Successful strategies include:

• Flexible scheduling: Offering four-day work weeks, flexible start times, or compressed schedules can be more attractive than salary increases
• Training investments: Many businesses are hiring candidates with potential rather than perfect qualifications, then investing in training programs
• Enhanced benefits: Improved health insurance, retirement contributions, or unique perks like professional development budgets
• Signing bonuses: One-time payments that don't permanently increase payroll costs but help compete for candidates
• Employee referral programs: Incentivizing current staff to recruit from their networks

The key is understanding that recruitment has become a marketing exercise - businesses must actively sell their opportunity rather than simply posting job descriptions and waiting for applications.

Long Island-Specific Recruitment Challenges

Nassau and Suffolk County employers face unique obstacles that require targeted solutions. The region's proximity to New York City creates wage pressure, while the suburban location limits public transportation options for potential employees.

Successful Long Island employers are addressing these challenges by:

• Offering transportation subsidies or flexible schedules that accommodate Long Island Rail Road schedules
• Partnering with local colleges and trade schools for recruitment pipelines
• Creating apprenticeship or internship programs that develop local talent
• Emphasizing work-life balance advantages compared to NYC positions

However, implementing these strategies effectively requires understanding current labor market dynamics and having systems in place to respond quickly when qualified candidates express interest.

The Urgency of Acting Now

With one-third of small businesses struggling to fill positions, the competitive advantage goes to employers who can attract and retain talent effectively. This isn't just about offering more money - it's about creating attractive opportunities that meet workers' current priorities.

The businesses that wait for the labor market to "return to normal" will find themselves increasingly disadvantaged as competitors adapt their recruitment strategies. Early 2026 is an ideal time to reassess your approach, as many workers make job changes in Q1 after receiving year-end bonuses elsewhere.

Consider conducting exit interviews with recent departures to understand what competitors are offering that you're not. Survey current employees about what would make your workplace more attractive to potential hires. Most importantly, ensure you can respond quickly when qualified candidates show interest - in this market, delays often mean losing candidates to faster-moving competitors.

Building Recruitment Capability

Many successful Long Island businesses have discovered that effective recruitment requires dedicated focus and expertise that goes beyond posting jobs online. The most effective approach often involves having professional support to develop recruitment strategies, streamline hiring processes, and respond quickly to candidate inquiries.

This doesn't necessarily mean hiring full-time recruiters. Instead, smart businesses are leveraging on-call HR support to respond quickly to hiring challenges and implement proven recruitment processes that work in the current labor market.

The 33% of small businesses with unfilled positions represents both a challenge and an opportunity. Companies that adapt their recruitment approach to current market realities will gain significant competitive advantages, while those that stick with outdated strategies will continue struggling to build the teams they need for growth.

Compliance Note: Benefit plan rules and tax implications vary based on company size and location. This summary is for informational purposes only. Please contact your Benton Oakfield representative to review how these changes impact your specific plan documents.