Small business jobs and wages held steady in June

Job and wage growth at small businesses remained stable in June, despite some moderation, payroll company Paychex reported Tuesday.

The Paychex Small Business Employment Watch showed an index level for June of 99.65, while hourly earnings growth for small business workers continued to trend below 3% at 2.79%. Since dropping below 4% in July 2023, hourly earnings growth has averaged a monthly decrease of 0.05%. 

“It’s kind of a sanguine report,” said Frank Fiorille, vice president of risk management, compliance and data analytics at Paychex. “From an overall standpoint, the labor market and small business employment continues to hold in there and be resilient. If you look at our index, even though it’s moderated somewhat, we do not see any recession in any of our data.”

He noted that Paychex’s Small Business Jobs Index has been dropping a little bit, but not significantly. “If you look at some other data, you definitely start to see a few cracks and some softness,” said Fiorille. “Obviously, it’s clearly not as strong as it was. We continue to hear that the key word is ‘frozen,’ that businesses are waiting to see what happens.”

He cited the fate of the Trump tax bill and tariffs. “Are there going to be any last-minute changes in the tax bill, or anything else that comes from that?” said Fiorille. “That’s taken all of the wind out of the room.”

The Midwest remained the top region for small business job growth for the 13th month in a row, with a jobs index level of 100.15. While the Midwest, South, and Northeast regions slowed slightly in June, they have held or improved their pace of job growth during the past quarter. 

“From a regional standpoint, the Midwest is still the top region,” said Fiorille. “Ohio was our top state.”

Ohio (101.04) regained the top rank among states for small business job growth in June with all sectors other than construction reporting a jobs index above 100. Dallas (100.82) ranked No. 1 among the largest U.S. metropolitan areas for small business employment growth in June, led by strong job gains in construction. Manufacturing’s small business jobs index (98.80) recorded the largest one-month (0.40 percentage points) and 12-month (0.18 percentage points) change rates among sectors in June.