Small Business Job Growth Continues to Slow as Wages Rise

As unemployment continues to fall, the big story surrounding small businesses has been the apparent worker shortage that has led to both slowing job growth and increased wages. Now the latest Small Business Employment Watch data from Paychex and IHS Markit reflects that reality, with the index ticking down to 99.12. This amounts to a .77% year over year decrease and is down 0.06% from last month.

Speaking on this month’s results, IHS Markit chief regional economist James Diffley said, “The national index has dropped 0.77% in the past year and 1.28% in the past two years. This slowdown in small business employment growth has coincided with the sharp fall in unemployment over the past two years.” Similary Paychex CEO Martin Mucci highlighted the hiring troubles entrepreneurs have reported, noting, “According to the latest Paychex Business Sentiment Report, released yesterday, business owners rank their ability to fill open positions with qualified candidates as a top challenge.” He continued, “With employment growth continuing to show moderate declines, we’re seeing first-hand the impact of the tightening labor market on small businesses.”

Of course, while job growth has slowed, wage growth has picked up. October’s report found the average hourly wage to be $26.85. That’s up 2.41% — or $0.63 — from last year. That’s easily a positive for workers but Mucci says some small business owners may have trouble keeping up. In an interview with CNBC, Mucci said, “Small businesses didn’t gain quite as much from tax reform. They’re having a harder time raising wages to get those people.” Mucci went on to note, “They also don’t have as much flexibility on raising benefits and putting more effort into recruiting, so they have a little bit tougher time.” While Mucci might speak somewhat from a place of theory, his sentiments were echoed by small business owner Judy Briggs in the Chicago Sun-Times, with Briggs saying of wages, “The most I can do is $15. The bigger companies are hurting us little guys.”

Taking a closer look at the report, the south proved to be the top region for employment growth while the western region saw the most wage growth. More specifically Texas came out on top in terms of jobs growth and Arizona had the greatest growth in wages. As for the sectors that are seeing the most growth, the report notes that the construction vertical index has remained above 100 for seven straight years.

At this point the worker shortage that many small businesses are experiencing is not exactly news. However monthly reports like this one from IHS Markit and Paychex as well as other indexes such as that released by the National Federation of Independent Business continue to highlight how the problem is affecting both businesses and workers. Furthermore the focus on the problem has seemingly shifted some to look at the discrepancy between how big businesses and smaller ones are being impacted by the recent tax law changes and other economic factors. As a result this surely won’t be the last we hear about shrinking job growth, increasing wages, or similar issues facing today’s small business owners.

Small business are continually changing and there are lots of job seekers out there but they don’t fit with the position needed.

There will never be a shortage of workers, but most of them are mismatched with the vacncies available.

Comments are closed.

Author

Jonathan Dyer

I'm a small town guy living in Los Angeles looking to make solid financial decisions. I write for a number of finance websites, including HuffingtonPost and Business2Community. I founded DyerNews.com in 2015 to focus on personal finance and the emerging FinTech markets.

Other Articles by Jonathan Dyer

Zilch Adds $50 Million to Latest Funding Round

Despite some reversals of fortune in FinTech as of late, a growing U.K.-based firm has announced an additional investment. Recently, Zilch announced that it had extended its round with an additional $50 million in funding. The added funds bring their Series C to a total of $160 million, while the company has now raised $460 million in equity and debt to date. The extended funding round comes on the heels...

Top 10 Personal Finance Articles of the Month — June 2022 

It’s time again for one of my favorite features here on Dyer News: a look at the top 10 personal finance articles of the month. To start, we'll take another look at financial independence and freedom. Then, with the housing market going a bit crazy lately, we'll feature a pair of articles on home buying. Lastly, we'll cover tips for one-income households, finance after death, fighting inflation, and more. As...

Bilt Rewards Launches Travel Portal with Benefits for Cardholders

Last year, the startup Bilt made a splash when it announced a new service that would reward users for paying their rent. That premise was then expanded upon with the launch of the Bilt Mastercard, which is issued by Wells Fargo. Now, continuing to capitalize on both the hype of their product and the demand for travel, Bilt has debuted another new offering for customers. This week, Bilt Rewards announced...