Wage Growth Among Small Businesses Hit Record High October
Slowly but surely, the United States is adding back jobs that were lost at the start of the pandemic. At the same time, several businesses have reported being unable to fill open positions, leading some to increase compensation. Now, the latest Paychex IHS Markit Small Business Employment Watch figures show that wage growth is continuing to accelerate.
According to the report, hourly earnings hit an average of $29.77. That marks a 3.85% increase from 12-months ago, which translates to $1.10. What’s more, the year-over-year wage growth represents a record high since Paychex’s reporting began a decade ago.
Broken down by region, the West has seen an even larger increase, growing 4.19% to reach an average hourly wage of $31.51. Speaking to that, Arizona saw the largest one-month annualized wage increase, growing 5.25%. However, over the 12-month period, North Carolina is the leader with 4.69% wage growth.
Meanwhile, the Small Business Jobs Index also ticked up in October, hitting 100.45 — the first time the national jobs index has topped 100 since 2017. It was also the fifth consecutive month of gain. Over the past 12 months, the index has seen a 6.50% increase. Once again, the West outpaces the other regions, seeing an 8.24% 12-month increase and reaching 100.98. Metro-wise, Dallas has experienced the largest base-year change, with their index climbing 3.73% to reach 104.32.
Commenting on this month’s report, Paychex’s president and CEO Martin Mucci noted, “The positive gains seen since June indicate that jobs lost in 2020 are steadily coming back, although there’s still ground to make up to return to pre-pandemic levels.” Mucci continued, “With hourly earnings growth at record levels, you can see employers are responding to labor market pressures and the impact of many workers leaving their current jobs and seeking new opportunities.”
Given America’s current economic and hiring landscape, the trends of jobs and wage growth seem likely to continue. In particular, with the holiday shopping season gearing up, it wouldn’t be surprising to see retailers offering a bounty of extra incentives to attract both seasonal and permanent workers. As for small businesses specifically, there could be some challenges ahead as entrepreneurs work to keep up with demand, while also enduring some much-publicized supply chain issues. However, overall, this month’s Paychex report is good news for small businesses, employees, and the U.S. economy at large.