U.S. Small Business Job Growth Shows Positive Gains, While Wage Inflation Decelerates

Weekly earnings growth increases as weekly hours worked stabilize

According to the Paychex Small Business Employment Watch, the Small Business Jobs Index rose 0.46 percentage points to 100.58 in May, the largest one-month increase since January 2022. At the same time, hourly earnings growth slowed to 3.13%, its lowest level since June 2021, for workers in U.S. small businesses with fewer than 50 employees. The report also indicated that weekly earnings growth was above three percent (3.09%) for the first time since January 2024 due to positive momentum in weekly hours worked by employees in May.

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The Paychex Small Business Jobs Index rose 0.46 percentage points to 100.58 in May, the largest one-month increase since January 2022. (Graphic: Business Wire)

“It appears we are seeing a stabilization in job growth and continued downward pressure on hourly wages,” said John Gibson, Paychex president and CEO. “Yet, challenges still remain for small business owners given concerns over inflation, access to capital, and a shortage of labor and skills.”

“Small business owners in most sectors scheduled workers for more hours in May, which resulted in increased weekly earnings,” Gibson added. “Following a long-term trend of decreasing hours worked for small business employees, there are early signs of a turning point, moving towards stabilization.”

Jobs Index and Wage Data Highlights:

• The national jobs index increased 0.46 percentage points to 100.58 in May, the largest one-month gain in more than two years. Despite the 0.46 percentage point increase in May, the national jobs index was down 0.09 percentage points during the past three months.
• At 100.58, the national jobs index showed modest employment gains, though at a slower pace than last year (0.78 percentage points).
• All regions improved their rate of employment growth in May, led by the Midwest with a one-month increase of 0.61 percentage points to an index level of 100.94. With an index of 101.05, the South has been the fastest-paced region for small business employment growth for 19 of the past 21 months.
• Following eight-straight decreases, the Leisure and Hospitality sector increased 0.77 percentage points to a 100.26 jobs index in May, marking the largest one-month gain since February 2023.
• Hourly earnings growth for workers slowed to 3.13% in May, the lowest level since June 2021 (2.90%), and resumed the downward trend of the past two years.
• One-month annualized hourly earnings growth was 2.11%, more than one percent below the year-over-year rate and the lowest level since November 2020 (1.74%).

The complete Small Business Employment Watch results for May 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 fewer than 50 workers, the monthly report offers analysis of national employment and wage trends and 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. The jobs index is scaled to 100, which represents no year-over-year change in job growth among same store businesses. Index values above 100 represent new jobs being added, while values below 100 represent jobs being lost.

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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