Paychex saw an increase in job growth at small businesses during the first quarter of the year.

The pace of small business job growth improved 0.36 percent since January, the biggest three-month increase in two years in the Paychex | IHS Small Business Jobs Index, although the index declines slightly over the past month, from 100.75 in February to 100.74 in March.

“We've basically recovered all the decrease in job growth that we saw in '15,” said Paychex president and CEO Martin Mucci. “It indicates a pretty solid expansion in the first quarter of small business jobs.”

He noted that most of the growth occurred in the coastal regions of the country, the West Coast and the Southeast and parts of the Mid-Atlantic. However, the Central regions of the U.S. experienced some decreases in small business growth, which Mucci attributed to contractions in the energy industry, particularly among oil and gas companies.

Washington state took the top spot among states. “That's high-tech jobs, which we see continue to see strong growth,” said Mucci. “New Jersey was up, but I think they're coming off a low point. Dallas slowed a little bit for the first time in a little while, so they dropped into the second spot. Seattle took over the top spot. They were one of the early cities to go with a minimum wage increase, but so far their job growth in small businesses is expanding instead of contracting.”

In terms of job sectors, most of the growth that Paychex is seeing is coming in what the U.S. Bureau of Labor Statistics refers to as “Other Services,” which includes discretionary services such as personal care and pet care. “It still has the best index and growth rate, the best growth rate change over last year as well,” said Mucci. “Construction saw a little bit of a drop-off, but that's still strong. Other Services is still at the top, although a percentage of those are part-time jobs. Part-time employment is up almost 4 percentage points now from three years ago, and it makes up almost 10 percent of total employment. Small businesses are still being cautious in hiring part-time first they make workers full-time. Those being employed are interested in job sharing, alternative work schedules, and even some part-time positions, in part because of the gig economy.”

He sees a role for accountants in helping small businesses deal with the changes.  “Accountants can help with the compliance aspect, which seems to be picking up on both the federal level and in many states. That includes helping small business employers with wage and hour and worker classification compliance. The Fed seems to be spending a lot of time on who is exempt, and who is not exempt. We're seeing minimum wages go up and the new overtime rules are going to roll out pretty soon. All of that puts a burden on small business in keeping up with the complexities. I think accountants will pick up a lot more work with the increased compliance and rules that are coming out.”

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