MONTGOMERY, Ala. (WIAT) — A recent survey shows small business optimism remains below average nationwide, according to the National Federation of Independent Business.

The report points out inflation and labor quality as two of the biggest issues.

Lorraine Richie opened Lorraine’s Bake Shop in Montgomery in September. She started her business from home before that, so she’s seen the impact of rising costs.

“Butter, eggs, milk, those things are so much more expensive now than they were just even three years ago,” Richie said.

When it comes to labor quality, Richie says she’s lucky not to have had problems with hiring. She says she was able to find staff through her customers.

“This is a part of our heart, and we really want people that feel the same way and can join that kind of a mission. So yeah, I feel really blessed,” Richie said.

For others, however, finding labor is becoming increasingly challenging. The report found that 43% of small business owners said they could not fill job openings last month, up three points from August.

The problem is even more pronounced in Alabama, where the workforce participation rate is among the lowest in the nation at 57%.

“It really means that people 16 to 64 — 43% of Alabamians are not in the workforce, so we have a huge issue with people just not participating,” NFIB State Director Rosemary Elebash said.

Elebash said she’s glad to see the state working to address this issue with a new commission. She hopes to see changes that give business owners more confidence.

“When we get optimistic, we can see the end, and they’re not seeing the end at this point,” Elebash said.

Elebash says one way the state could consider incentivizing more people in the workforce is through a childcare tax credit, which was proposed last session but did not pass.