Accountants could gain some extra business from the Obama administration’s proposed changes in determining overtime pay, according to the payroll giant Paychex, which found a slight decline in small business job growth in June in a mostly positive payroll report that it released Tuesday.
The Paychex | IHS Small Business Jobs Index was relatively unchanged in June, declining only 0.03 percent, bringing the national index to 100.63. Year-over-year, the index from payroll giant Paychex and the research firm IHS decreased 0.44 percent.
“What we’ve seen is small business employment growth is positive, but the pace is basically unchanged in the first half of 2015,” said Paychex president and CEO Marty Mucci in an interview Tuesday. “We’re down a little bit, almost half a percent of the change in growth from last year, but I think we kind of peaked out last year, and now it’s hit a positive steady state for the first half of 2015 as you look at the whole country.”
The national index has shown mixed results since September 2014, moving within a narrow band for the past 10 months between 100.56 and 100.85. Small business employment conditions slowed 0.44 percent since last June. However, the national index remained well over 100 during the past 12 months, signifying continued growth.
With a national index level above 100, employment growth conditions remain stronger than during the index’s base year of 2004. The East North Central region maintained its position as the highest-ranked regional index. Washington regained the lead among states once again. Dallas continued its streak of strong employment growth and was the top-ranked metro area for the ninth consecutive month.
“When you look at the regions, the Central is still doing the best,” said Mucci. “Everybody was down a little bit compared to last year, but the Central part of the U.S. and the Mountain region seem to be doing the strongest.”
In comparison, Paychex and IHS are seeing lower growth rates in New England and the Mid-Atlantic areas.
“From a state perspective, Washington State took the top spot,” said Mucci. “Their index is over 103, so there’s nice, strong small business growth in Washington State, while Michigan and Wisconsin round out the top three. Texas continued to be strong, but it fell into the fourth spot. I think Texas is interesting because Dallas is still the number one city, but Houston has dropped off a little bit. I think that’s the spillover, so to speak, of oil and energy jobs, which may have dampened because of the lower prices and so forth.”
Paychex also saw slowdowns in small business hiring in New Jersey, New York and Virginia. “I’d say generally the slowest ones are New Jersey and New York,” said Mucci. “New York has had a little bit of an uptick, but they still seem to be the slowest, from an overall perspective. Virginia fell a little bit, but it’s been pretty strong. It could be just a little bit more volatile, but I’d say still the slowest parts are the East Coast, particularly the Northeast.”
Overtime Pay Rule Changes
Mucci believes accountants will be able to help small and midsize business clients deal not only with job growth, but also with the proposed changes in overtime pay rules that the Obama administration issued Monday. The Department of Labor issued a proposed rule that would raise the threshold for certain salaried workers who are exempt from claiming overtime pay from $23,660 to $50,440, potentially allowing another 5 million workers to earn larger paychecks.
“I think overtime could be a lot of work for accountants over the next few months if that gets approved because they’ll have to help their clients figure out who is exempt and non-exempt,” said Mucci. “Companies like Paychex and the accounting community will be looking to help clients not only with the Affordable Care Act, but also now these overtime requirement changes.”
Mucci pointed out that if the rule is approved, it could put more pressure on small and midsize businesses with overtime costs. “They’re going to have to re-categorize their employees as exempt or non-exempt, and then start to plan how they’re going to drive their work because there is going to be more overtime cost to it,” he said. “They’re going to need help classifying possibly some of their workers and then looking at how much overtime they already pay and how much that’s going to go up. Do they add additional workers instead of paying overtime? I think there will be quite a bit of work there that they may look for accountants for their assistance. Right now, it’s out for comment, but it looks like it’s on a pretty strong track to be approved.”