Small businesses added 50,000 new jobs in January; however, they also paid employees less and gave them fewer hours, according to the Small Business Employment Index by Intuit Inc.
The index also reveals that small-business employment grew by 0.2 percent in January for an annual growth rate of 2.9 percent. As average monthly hours worked dropped by 0.05 percent to equal six minutes, average monthly compensation fell by 0.1 percent to $3.
"Overall the small-business labor market is not weak but not strong, either," says Susan Woodward, the economist who worked with Intuit to create the Index. "Small-business employment continues to rise but at a rate that will not get us back to full employment very quickly. Overall, nonsalaried employees saw their hours and compensation decrease slightly, but so did the price level. When adjusted for inflation, compensation is about flat. The percentage of non-salaried people working full time is also down slightly, a trend that began in March 2011."
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According to January's numbers and revised national employment data from the Bureau of Labor Statistics, Intuit modified the previously reported December growth rate to 0.3 percent, meaning 60,000 jobs were created in December. That is a jump from the previously reported 55,000 jobs.
Small-business hourly employees worked an average of 107.5 hours in January, which is slightly lowered from 107.6 hours in December, marking a 24.8-hour workweek. Average monthly pay for all small-business employees also fell to $2,632 in January, a decline of 0.1 percent from the December revised estimate of $2,635 per month. The equivalent annual wages equals to approximately $31,600 per year, amounting to part-time work for many small-business employees.
Other than New England, the index also reports employment growth in each census division as well as many states tracked by the index with the exception of New York and Maryland.
"The geographical pattern of labor market indicators shows more weakness in employment on the East Coast, especially the New York region where there are more financial service businesses," Woodward says. "This suggests that the continuing uncertainty regarding the Euro and the debts of the European sovereign nations are a force in economic activity here. We hear this on the news, and we can see it in the small business figures."
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