U.S. Small Businesses Continue to Show Moderate Job Growth and Wage Inflation Continues to Moderate

According to the Paychex Small Business Employment Watch, year-over-year hourly earnings growth for U.S. workers moderated to 3.42% in February, continuing a trend that began mid-2022. Small business job growth held steady from last month, with the national Small Business Jobs Index closing February at 100.67.

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The February Paychex Small Business Employment Watch showed hourly earnings growth for U.S. workers at 3.42% and a national jobs index of 100.67. (Graphic: Business Wire)

“While our index continues to show job growth in businesses with fewer than 50 workers, it has now remained below pre-pandemic levels for two months. For the first time since March 2021, a major region has fallen below 100 (West: 99.81),” says John Gibson, Paychex president and CEO. “A tight job market for qualified candidates, access to affordable growth capital, and concerns about inflation continue to constrain small business owners from reaching their full growth potential.”

“Wage growth for small business workers continues to moderate, most notably for weekly earnings in Leisure and Hospitality. The sector fell below three percent (2.58%) for the first time since January of 2021 and is down from a peak of 10.35%,” adds Gibson.

Jobs Index and Wage Data Highlights:

• The national index for February (100.67) continued to show slow and steady growth, down just 0.26 percentage points since July 2023.
• National hourly earnings growth moderated to 3.42% year-over-year, continuing a measured deceleration that began in May 2022.
• The West (3.87%) led regional hourly earnings growth for the ninth month in a row, and job growth fell below 100 for the first time since March 2021.
• The South reported the weakest hourly earnings growth (3.11%) among regions in February. It remained the strongest region for small business employment growth (101.35), a designation it has held for 17 of the last 18 months.
• Small business job gains in Leisure and Hospitality (100.24) continue to level off after pandemic surges, down 0.35 percentage points from last month and 5.09 percentage points from last year.

The complete Small Business Employment Watch results for February 2024, including interactive charts detailing the data at a national, regional, state, metro, and industry sector level are available at www.paychex.com/watch. Learn more and sign up to receive monthly Employment Watch alerts.

About the Paychex Small Business Employment Watch

The Paychex Small Business Employment Watch is released each month by Paychex, Inc. Focused exclusively on businesses with less than 50 workers, the monthly report offers analysis of national employment and wage trends, as well as examines regional, state, metro, and industry sector activity. Drawing from the payroll data of approximately 350,000 Paychex clients, this powerful industry benchmark delivers real-time insights into the small business trends driving the U.S. economy.

About Paychex

Paychex, Inc. (Nasdaq: PAYX) is an industry-leading HCM company delivering a full suite of technology and advisory services in human resources, employee benefit solutions, insurance, and payroll. The company serves approximately 740,000 customers in the U.S. and Europe and pays one out of every 12 American private sector employees. The more than 16,000 people at Paychex are committed to helping businesses succeed and building thriving communities where they work and live. Visit paychex.com to learn more.

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