Small business employment recovered in June, more than making up for a slight decline in May, according to new figures from the payroll giant Paychex.
The Paychex | IHS Small Business Jobs Index, which Paychex compiles with the research firm IHS, rebounded 0.21 percent in June, climbing to 100.81, while reversing a decline of 0.18 percent in May. The second quarter of 2016 saw an overall gain of 0.07 percent. The change in the pace of small business employment growth from May to June was the biggest in the national index since June 2013.
“We had a nice rebound in the month of June,” said Paychex president and CEO Martin Mucci. “Last month when the Small Business Jobs Index decreased, it foreshadowed the slow jobs number [from the U.S. Bureau of Labor Statistics]. With the Paychex number increasing now, maybe we’ll see the jobs number up. We tend to be a leading indicator. The Small Business Job Index is the highest number all year. 2016 has been a year of good growth, with almost half a percent job growth rate compared to last year.”
The biggest growth in regions occurred in the South Atlantic, which hit a record level in June at 101.96 to earn the top place among regions. Among the states, Washington State remained in the lead, with Florida, Georgia, Virginia and North Carolina following it.
From a city standpoint, Seattle and Dallas ranked at the top, but are heading in opposite directions. “Seattle has the highest index, but Dallas continues to drop from last year,” said Mucci. “They’re still the top two, but they’re on divergent paths.”
Construction had the biggest gain in three years, at nearly half a percent, with many of the gains occurring in the South. “Other Services (except Public Administration)” continues to lead among industry sectors with an index level of 105.32, with much of that growth in the Pacific region.
Part-time employment remains at a high rate as a component of total employment. Overall wages are up about 3.6 percent compared to last year, in part due to minimum wage increases in several states. “Some of the minimum wage laws going into effect are pulling up the wage rate, but it seems to have a little bit of a dampening effect on job growth,” said Mucci. The states that have minimum wage increases appeared to have job growth rates on the index about a half point lower than those that don’t.
He advised accountants to help their clients stay up to date with changes in minimum wage laws, along with family leave policies and the Department of Labor’s expansion of overtime pay to cover more workers (see Obama Administration Expands Overtime Pay Eligibility). The overtime rule changes take effect on December 1.
Mucci noted that the Labor Department plans to conduct a study on the effect of mobile technology on overtime pay. “They’re going to study what happens for all those employees who are supposed to be paid overtime for over 40 hours when they’re using laptops and email to do work after hours,” he said. “If that takes effect, it could have an impact on employees using mobile technology after hours.”
He does not foresee much of an impact on small businesses in the U.S. from the Brexit vote in the United Kingdom, unless they are involved with imports and exports with the U.K. and Europe.
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