Employees at small businesses in the U.S. experienced the 12th month in a row of increases in hourly earnings this May, but the pace of job growth slackened, according to payroll giant Paychex.
The
Hourly earnings increased $1.50 over the past year, now reaching $30.31. At 100.87, the national jobs index saw the largest one-month decline in more than two years.
“We continue to see very robust wage growth on hourly wages and weekly earnings among all sectors, specifically in the leisure and hospitality sector, almost touching 9% on an annual basis,” said Frank Fiorille, vice president of risk management, compliance and data analytics at Paychex. “However, we’ve been seeing a little slowdown in the past quarter in the employment index, and this month it accelerated a little bit, although it’s still at very high levels. We’re still seeing very high demand, but businesses continue to have a hard time finding people to fill those roles.”
Even though businesses have been boosting wages and bonuses to attract employees, they are still coming up short on hiring enough workers. In response, some businesses have needed to curtail the number of hours they are open to the public.
The South continued to be the top region for small business job growth, with Texas again the leading state, and Dallas the top metropolitan area.
The South was also the top region in terms of hourly earnings growth, with North Carolina as the leading state. Tampa Bay led the metro areas on weekly earnings growth at 6.02%, and ranked second only to Dallas for hourly earnings growth (6.19%).
“There are two different stories in Florida, where you see Miami is pretty strong, but Tampa is lagging and at the bottom of our index,” said Fiorille. “They have been very strong for quite some time and now there’s a high bar to meet.”
Leisure and hospitality led the various industry sectors on both small business job growth and hourly earnings growth. However, there has been a slowdown in that sector too in May. “Even though it’s the fastest growing index and doing the best overall, the growth there has definitely slowed this quarter,” said Fiorille.
Accountants should keep their small business clients informed about how the Internal Revenue Service is coping with its backlog of unprocessed tax returns, especially the ones filed on paper. “You’re seeing more buzz around them requiring certain electronic filing and less paperwork to help with their backlog,” said Fiorille. “Even though those backlogs are still pretty big, they’re getting through those. Whether businesses are waiting for their Employee Retention Tax Credit or individuals waiting for their refunds, it sounds like the backlogs are getting better.”
