Labor & Employment Law Daily Wrap Up, INDUSTRY NEWS, TRENDS—Survey finds business owners shoulder rising costs to protect workers, (Feb 12, 2026)

By WK Editorial Staff

"Rising costs are forcing tough choices, but many owners are still putting their people first," said Kathy Bostjancic, chief economist for Nationwide.

According to a new survey conducted by Nationwide, nearly half (49 percent) of small and mid-market business owners assess the U.S. economy as "poor" or "fair," attributing their concerns primarily to inflation, elevated interest rates, and apprehensions regarding a potential recession. Nonetheless, many business owners remain committed to supporting their workforce by sustaining staffing levels, increasing wages, and safeguarding employee benefits, frequently incurring personal financial sacrifices to do so.

Hiring has remained resilient. More than half of mid-market businesses (52 percent) and nearly one-third of small businesses (31 percent) added employees in the past year, and more than one-quarter of owners expect to hire in 2026.

Wage growth has followed a similar pattern. Over one-third of business owners (37 percent) increased wages in the past 12 months, and four in ten expect to raise wages again in 2026, even as margins remain tight. Looking ahead, one in five business owners (20 percent) say improving employee benefits is among their biggest business opportunities over the next 12 months.

For business owners worried about inflation and an uncertain environment, sustaining these investments has often meant absorbing costs personally:

• 15 percent of small business owners and 13 percent of mid-market owners reduced their retirement savings in the past year.

• 14 percent of small business owners and 13 percent of mid-market owners tapped into personal retirement funds to support their businesses in the past 12 months.

• If needed, nearly one-third of small business owners and nearly one-fifth of mid-market owners say they would choose to cut their own salary before reducing employee benefits.

• Roughly one in 10 business owners canceled or delayed purchasing insurance in the past year, potentially increasing their exposure to risk.

"Rising costs are forcing tough choices, but many owners are still putting their people first," said Kathy Bostjancic, chief economist for Nationwide. "While job growth has slowed this past year, particularly among smaller enterprises, small and mid-market business owners we surveyed are committed to their employees. Their optimism about their business and the economy in the year ahead may have some merit— we forecast a solid economic expansion in 2026 on tailwinds from looser Fed policy and provisions from last year's fiscal stimulus package."

Positioning for the future. Despite ongoing economic pressure, many business owners report confidence in the near-term outlook for their own companies. More than half of business owners (57 percent) say they are very or extremely confident their business is prepared for future risks, and large majorities rate their current financial health as "good" or "excellent."

That confidence extends cautiously to the broader economy. More than half of business owners expect economic conditions to improve in 2026.

One way business owners are responding to economic pressures is through technology investment. Among mid-market firms in particular, AI is playing a growing role in managing costs and improving efficiency.

More than one-third of mid-market businesses (35 percent) invested in AI technology in the past year, and among those that did, an overwhelming majority (93 percent) report seeing a positive return on investment. At the same time, concerns remain: nearly two-thirds of business owners say increased use of AI presents a cybersecurity risk.

Meanwhile, small businesses are taking a more defensive approach. Owners of smaller firms are focusing on preserving cash flow by prioritizing customer retention (30 percent) and reducing overhead (26 percent), while also strengthening supplier relationships (25 percent). Small and mid-sized firms face similar economic pressures, but differences in their responses largely reflect differences in financial capacity.

Rising risk, limited guidance. As business owners navigate economic volatility, workforce strain, rising prices, supply chain disruptions, and rapid technological change, many are not taking advantage of professional guidance to reduce risk. Just 16 percent of small business owners and 27 percent of mid-market owners met with their current financial professionals for guidance in the past year; even fewer hired a financial advisor (13 percent and 19 percent, respectively).

While financial advisors have an opportunity to engage business owners, insurance agents remain a trusted resource. Nearly two-thirds of small business owners (63 percent) and more than four in five mid-market owners (81 percent) currently work with an agent. Amid rising business risks and cost pressures, many owners say they would welcome broader conversations beyond coverage— including rising liability costs, pricing pressures, and supply chain risks.

As owners continue to protect customers and employees, early, integrated financial and insurance guidance can play a critical role in helping them balance near-term challenges with long-term goals.

News: Surveys EconomicNews IndustryNewsTrends Reports