Small business wage and job growth stayed flat in March

Hourly earnings and job growth for workers in small businesses remained mostly unchanged last month, according to payroll provider Paychex.

The Paychex Small Business Employment Watch, which includes the Paychex Small Business Jobs Index, showed job growth continued at levels seen over the last several quarters at 99.75 in March for U.S. businesses with fewer than 50 employees. Paychex wage data found the hourly earnings growth rate (2.91%) for workers in U.S. small businesses remained essentially similar in March compared to February.

The national Small Business Jobs Index dipped 0.29 percentage points to 99.75 in March, slightly less than the pace set at the end of the past two quarters. At 2.91%, hourly earnings growth stayed below 3% for the fifth month in a row in March, while one-month annualized hourly earnings growth (3.51%) outpaced annual growth (2.91%) for the fourth consecutive month.

“We don’t see any signs of recession,” said Frank Fiorille, vice president of risk, compliance and data analytics at Paychex. “It looks like they’re still doing OK, not gangbusters, but still keeping up with the range that they have done the past few months.”

The Midwest remained the top region for the 10th consecutive month on small business job growth, despite slowing 0.58 percentage points in March. Texas continued to lead the other states on small business job growth in March, while Minneapolis gained 1.87 percentage points to move into first place in March among metropolitan areas. The manufacturing industry gained 1.05 percentage points during the first quarter of 2025 to perform best among the industry sectors on job growth.

On the wage front, Tampa topped the other metro areas in March in terms of both hourly earnings growth (4.20%) and weekly earnings growth (4.00%).

Fiorille doesn’t see much impact on small businesses yet from the tariffs that President Trump administration has threatened to impose on Wednesday. “My handicapping of this is that it will obviously impact them, but not as much as you’d think,” he said. “I do think a lot of them are service related, but even in the service-related ones, they’ll have some issues if they import stuff as well. Then there might be some indirect inflation costs on them.”

He advises accountants to keep an eye on further developments on tariffs, tax changes and the steady stream of executive orders from the White House.