Small business employment growth fell for the second month in a row in October, slipping 0.11 percent from September, according to payroll giant Paychex.
The latest Paychex | IHS Small Business Jobs Index, which Paychex produces with the research firm IHS Markit, was 100.41. After the index peaked for the year in June, the national index fell 0.40 percent in the second half of the year, echoing the third-quarter slowdown in total employment reported by U.S. Bureau of Labor Statistics. However, Paychex’s national index was still 0.06 percent higher than in October of last year.
“What we’re seeing is a moderation this month,” said Paychex president and CEO Martin Mucci. “It’s still positive job growth over our index and certainly over the base year, but it has flattened out a bit from June. I think there is some cautious concern about the election.”
More employers are shifting to part-time hiring. “Part-time hiring is really over 10 percent of the total hiring now, and that’s up about 4 percentage points from three years ago,” said Mucci. “That’s giving people a little more flexibility on benefits and other expenses, and whether they need employees full-time or not if demand changes for their products and services.”
The “Other Services” category of discretionary services, such as pet care, still had the strongest growth among industries on Paychex’s index last month, as it usually does, although that figure has flattened out and slowed down somewhat too. The “Other Services” category was down 0.76 percent during this past quarter, but, at 104.37, employment gains in that sector still outpaced all the other sectors.
Construction employment growth fell in October among small businesses. “Construction is down for the fourth month in a row, but it’s still heavy in certain areas of the country like the Southeast,” said Mucci. “The Southeast is still seeing gains for jobs in construction, mostly in Florida, both commercial and residential.”
The education and health services sector moved up to second place among industry sectors, growing 0.49 percent during the past year. The leisure and hospitality industry experienced a large acceleration in October. But manufacturing and financial activities remained the weakest sectors.
The South Atlantic region of the country was the fastest-growing area, with states like Florida, Georgia, Virginia and North Carolina among the strongest in terms of small business job growth.
Mucci advises accountants to keep their clients informed about the new overtime rules from the Labor Department that are scheduled to take effect on December 1, expanding overtime pay to millions more workers around the country. “It’s helpful in the next 30 days to make sure clients are aware of the rules, and the time tracking that needs to be done,” he said.
The election could have an impact on wages, as several states and cities have ballot measures on issues such as minimum wages and paid sick leave. “Voters are deciding on minimum wage increases in states like Arizona, Colorado, Maine, and Washington and sick leave mandates too,” said Mucci. “You have minimum wage increases on the ballot in L.A., San Diego, Cincinnati and Washington, D.C. Accountants can help businesses understand the state and local changes that they need to be aware of, and how they pay and track the time of their employees.”
Some states, such as Alabama and Virginia, also have ballot measures on labor union membership, he noted. “There’s a lot of state activity in this election that hasn’t really gotten the headlines that could have an impact for accountants,” said Mucci.
Paychex recently surveyed small businesses about their biggest concerns. The major three were health care, government regulation and complexity, and tax reform. “It’s fairly split in many ways,” said Mucci. “If you think about tax reform, about half of the small businesses said closing tax loopholes that benefit the wealthy is important and the other half said that reducing the number of individual tax brackets and capping the corporate tax rate at 15 percent was important. On the minimum wage, about two-thirds said it was OK to raise the minimum wage, but then it differed on how much higher over the current $7.25 they would support. Over 50 percent said government regulation and complexity was the thing that was hurting their business growth the most.”
When small business owners were asked who they believe will win the presidential election, 39 percent of the survey respondents said they believe Hillary Clinton will win. However, when the question changed to which candidate they plan to vote for, 51 percent of the poll respondents said they would vote for Donald Trump while 25 percent indicated they would vote for Clinton. In addition, 50 percent of the survey respondents said they believe Trump is the candidate who best represents the interests of small business, while 23 percent said Clinton was, and 16 percent said they don’t know.
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