Challenges for Small Businesses in Arizona’s Labor Market

Categories: Arizona Business NewsArizona State News

Small businesses in Arizona face hiring challenges amidst a tight labor market.

News Summary

In April 2025, 34% of small business owners in Arizona reported unfilled positions, according to the NFIB Jobs Report. Chad Heinrich urges legislative action for Senate Bills aimed at easing recordkeeping and protecting local businesses. The hiring environment remains tough, affecting over 641,000 businesses in the state. Delays in federal funding and the Corporate Transparency Act further complicate the challenges faced by small businesses. The NFIB continues to advocate for clearer guidance to help these enterprises navigate financial and regulatory hurdles.

Arizona – In April 2025, 34% of small business owners in Arizona reported having open positions that they were unable to fill, according to the latest Jobs Report from the National Federation of Independent Business (NFIB) released on May 1, 2025. This alarming statistic highlights the ongoing challenges that small businesses in the state are facing in attracting qualified applicants amid a tight labor market.

Chad Heinrich, the Arizona State Director for NFIB, emphasized the crucial role that small businesses play in Arizona’s economy. He called on the Arizona State Legislature to pass two significant Senate Bills, 1069 and 1215, aimed at reducing the burdens of recordkeeping on small businesses and defending legal proceedings from foreign interference. These measures are designed to support the stability and growth of the small business sector, which forms the backbone of the state’s economy.

While there has been a slight decrease in the percentage of unfilled positions, the overall hiring climate for small businesses remains tough. Bill Dunkelberg, NFIB’s Chief Economist, remarked that many small businesses continue to struggle with hiring suitable candidates. Currently, typical NFIB members employ between one and nine individuals and report average annual gross sales of about $500,000. This demographic forms a substantial portion of Arizona’s economy.

The NFIB Jobs Report is published monthly and is based on a national survey of NFIB-member small business owners. It provides insights into employment trends and labor market challenges that small businesses are facing across the U.S. In Arizona, there are approximately 641,000 businesses, and more than 627,000 of these have fewer than 20 employees. The significance of the small business sector cannot be overstated, as it is a major contributor to job creation and economic stability in the state.

Another pressing issue affecting small businesses is the delay in the implementation of the Corporate Transparency Act, which has resulted in over 640,000 Arizona businesses avoiding the requirement to disclose ownership information by the January 1, 2025 deadline. The Act aims to combat money laundering by requiring corporations and limited liability companies in the U.S. to submit reports detailing beneficial ownership information to the Financial Crimes Enforcement Network (FinCEN). The penalties for noncompliance include civil fines up to $509 per day and criminal charges with potential fines up to $10,000 or imprisonment for up to two years.

A further complication arises from the lack of federal funding, which has affected more than 23,000 households in Arizona that qualify for home repair and HVAC upgrade funding programs. HVAC contractors are facing significant financial losses due to the suspension of federal funding for essential services to low-income households. The Arizona Governor’s Office of Resiliency has reported that many HVAC contractors who depended on prompt reimbursements from the government are now incurring substantial debt.

As small businesses call for clearer guidance concerning new reporting requirements and compliance obligations under federal law, the NFIB has been advocating for small and independent business owners nationwide for over 80 years. Their mission is to provide support and resources to help member businesses thrive amidst evolving economic and regulatory challenges.

In summary, the current labor market conditions and federal regulatory environment present multifaceted challenges for small businesses in Arizona. The struggle to fill positions is compounded by regulatory hurdles and funding issues, making it essential for legislative action and clearer guidance to foster an environment conducive to small business growth.