The spate of recent hurricanes appears to have dampened small business employment growth last month in some parts of the country, according to figures from payroll giant Paychex.

The Paychex | IHS Markit Small Business Employment Watch, which Paychex compiles with the research firm IHS Markit, indicated a slight slowdown in small business job growth in September, although wages continued to show solid growth. The Small Business Jobs Index was 99.93 in September, down 0.03 percent from August. However, Paychex pointed out the national index has been relatively flat ever since June.

At $26.03 in September, hourly earnings increased 2.96 percent (or $0.75) compared to a year ago, equivalent to the pace in August and slightly under July’s 2.99 percent growth rate. However, one-month annualized growth rates for weekly hours worked were down significantly in Florida and Texas, particularly in Miami and Houston, possibly as a result of Hurricanes Irma and Harvey.

“We looked at Houston and Florida and we definitely saw a drop in the hours worked, which you’d expect,” said Frank Fiorille, vice president of risk, compliance and data analytics at Paychex. “We expect it might jump back up next month as contractors and businesses like that begin to rebuild. We’ll be watching that really closely.”

It wasn’t only the hurricane-wracked parts of the country that saw a slowdown. Fiorille pointed out that both California and New York saw significant drops in small business job growth.

“There’s strength in the middle part of the country and the south, but some weakness in California and New York,” he said. “Those two big states are kind of dragging.”

In terms of wage growth for particular industries, the Other Services category of discretionary services again led the way in September. However, due to a decrease in hours worked, weekly earnings gains in leisure and hospitality slowed somewhat in September. The construction industry rose 3.16 percent from last September, putting it in the middle of the pack among industries for hourly earnings growth.

He believes accountants should keep a close eye on regulatory developments at the state level that could affect their clients as the federal government pulls back on regulation. “Even though at the federal level they continue to talk about unwinding regulations, to counter that, we are seeing a definite uptick in the states doing their own thing to kind of counteract that, or feeling like they have to do that,” said Fiorille. “That can be pretty tough if you’re a business or an accountant in multiple states. You have to keep track of paid sick leave, minimum wage, you name it.”

He also advises accountants to be aware of the tax relief available to clients affected by the recent hurricanes, extending filing and payment deadlines. “The IRS has announced some disaster relief,” he noted. “The accountants need to know what’s going on with that.”

Paychex small business wage growth

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Michael Cohn

Michael Cohn

Michael Cohn, editor-in-chief of AccountingToday.com, has been covering business and technology for a variety of publications since 1985.