Small business job and wage growth stayed steady in September

Small businesses with fewer than 50 employees maintained steady job growth and hourly earnings growth this past month, according to payroll company Paychex.

The Paychex Small Business Employment Watch for September found hourly earnings growth for U.S. small business workers remained largely consistent and, at 2.68%, was below 3% for the 11th month in a row.

“Our latest small business employment data once again indicates a steady labor market over the past year,” said Paychex president and CEO John Gibson in a statement Tuesday. “This consistency reflects continued resilience from small businesses across the U.S. While we’re observing little change in our national data, the Midwest continues to stand out and is the only region consistently delivering job growth over the past year and beyond.”

The national Small Business Jobs Index in September was 99.52, or 0.31 percentage points below August. Even though the figure has stayed below 3% for nearly a year, national hourly earnings growth rose 0.05 percentage points from August to 2.68% in September, marking its first increase since October 2024.

The Midwest has led the way among regions for small business employment growth for the past 16 months, including a 100.02 jobs index for September. In particular, Ohio (100.87) and Indiana (100.64) are the only states to report year-over-year job gains in September. Ohio has been among the top two states for small business employment growth for the past six months.

September is the 16th month in a row in which education and health services ranked as the top sector for small business job growth at 101.06. In second place, at 100.10, financial activities was the only other sector reporting year-over-year job gains in September.

Separately, Homebase released its September Main Street Health Report amid uncertainty over whether the U.S. Bureau of Labor Statistics will release its jobs report on Friday during what’s expected to be a government shutdown starting Wednesday. Homebase found workforce participation fell 3.6% and hours worked declined 4.7% in September, almost exactly in line with late-summer pullbacks we saw in 2023. On a regional basis, the Northeast and Midwest drove the sharpest declines in activity. In terms of sectors, the entertainment (-21.4%) and hospitality (-10.7%) industries saw expected back-to-school drops, while medical/veterinary ticked upward. Despite slower activity, wages continued to climb across all sectors, now nearly 40% higher since January 2022. Both hiring and turnover eased, suggesting small businesses are focused on roster stability as opposed to aggressive growth.