The rate of growth for hiring and hourly earnings stabilized this month at small businesses, according to a report released Tuesday by payroll processor Paychex.
The August edition of the Paychex | IHS Markit Small Business Employment Watch indicated hourly earnings growth was unchanged at 3.98% in August, although one-month annualized growth ticked up to 4.71%. The national Small Business Jobs Index — which measures the rate of small business job growth in the U.S. — was essentially flat at 99.10 in August, slipping 0.04%. Growth in the number of weekly hours worked has slowed in recent months and is down 0.45% year-over-year.
“It was a flattish sort of month for both job growth and wages,” said Frank Fiorille, vice president of risk, compliance and data analytics at Paychex. “It’s still growing, but growth is very slow and decelerating a little bit as we work our way through to the fall.”
He pointed to the U.S. Bureau of Labor Statistics’ Job Openings and Labor Turnover Survey that was also released Tuesday morning, which also indicated a decline of 388,000 job openings to a total of 8.8 million. “On the JOLTS report, job openings have really dropped a lot,” said Fiorille. “Overall, it does look like the jobs picture is slowing somewhat.”
Nevertheless, there is still job and wage growth at small businesses, even if the levels have dropped as the Federal Reserve continues to raise interest rates to curb inflation. Fiorille noted that even though wage growth was below 4% compared to a year ago, the month-to-month rate has been ticking up slightly over the past two months, and that may be a sign of accelerating wage growth. The uptick may be linked to labor union wins on contracts. For example the recent UPS deal is expected to boost pay in the future for delivery drivers.
Other reasons for wage growth stem from the continuing shortages of workers in industries such as leisure and hospitality. The leisure and hospitality industry topped the other sectors in terms of hourly earnings growth in August at 4.83%, and has remained among the top two sectors for the past two and a half years.
North Carolina was again the top-ranked state for small business job growth, despite slowing for the sixth consecutive month, overtaking Texas. Houston’s jobs index ranked in first place among metropolitan areas in August and was more than a point higher than second-ranked Miami.
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