Wage growth and hours worked climbed at small businesses in July, although the rate of job growth dipped slightly, according to Paychex.
The
“The index is still going up, but the growth has definitely decelerated and come down for quite some time now,” said Frank Fiorille, vice president of risk management, compliance and data analytics at Paychex. “Last month we saw a pretty sharp spike down. This month it came back a little bit. Even though the index dropped, meaning the growth dropped, it didn’t drop as much as it did last month. These businesses are having a really difficult time finding, attracting and retaining employees, given the tight labor market. You don’t see that in the larger businesses. The small to medium-sized businesses are having a harder time finding employees than the larger businesses, which makes sense. They have a harder time competing on benefits and things like that. Conversely, though, wages have started to tick up nicely over the past four or five months.”
The national jobs index reached 98.18, down 0.15 percent from last month and 1.18 percent below its pace last July. The deceleration in job growth came after an even bigger 0.45 percent decrease in June.
On the other hand, hourly earnings growth achieved its strongest rate in more than a year at 2.70 percent in July, while weekly earnings growth improved to 2.57 percent. One-month annualized growth for weekly hours worked was up 1.19 percent, the highest level it’s seen since 2017.
“We saw a spike in overall hours worked,” said Fiorille. “It makes a lot of sense. They can’t find employees in the hospitality and retail sectors so they’re having their employees work more hours.”
The financial activities sector was the only industry sector to increase the pace of job growth in July. The South remained the top region for employment growth, while the West led the way among regions in terms of hourly earnings growth. Texas maintained the lead among states in small business job growth, while Illinois remained the top state for wage growth. Dallas was again the top metropolitan area for job growth in July, while San Diego kept its lead among metro areas in terms of wage growth.
Fiorille advised accountants to keep their small clients informed about trends like real-time payments and money movement. “There’s a lot going on from a regulatory standpoint and product standpoint in the payments and money movement industry,” he said.
