employees in a group photo Brokendown by employee type, wage growth for hourly employees was 3.55percent year-over-year, while wage growth for salaried employeeswas 1.92 percent. (Photo: Shutterstock)

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As competition for talent remains fierce, workers already on thejob are picking up extra hours and gaining extra pay, according tothe Paychex | IHS Markit Small Business Employment Watch.

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As small business job growth continues to slow, wages forcurrent employees rise and their working hours increase, data fromabout 350,000 Paychex clients shows.

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"Small businesses are adapting to the challenges of the tightlabor market by increasing hours and earnings," says Martin Mucci,Paychex president and CEO. "In August, we saw an increase in weeklyhours worked, as well as higher hourly earnings growth compared tothis time last year."

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Related: Small businesses feeling good about currenteconomy

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As a measure of small business job growth, the report's nationaljobs index fell 0.17 percent from last month, to 98.01. It was a0.76 percent drop over the past quarter, and a 1.22 percent declinefrom August 2018.

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"The jobs index has fallen since early 2017. In 2019, we've seena continuation of that slowdown," says James Diffley, chiefregional economist at IHS Markit.

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At the same time, hourly earnings increased 2.61 percent from ayear earlier, to $27.30 – though wage growth leveled off over thesummer. Weekly hours worked showed positive growth for the firsttime in 2019, rising 0.07 percent.

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Other key findings include:

  • Broken down by employee type, wage growth for hourly employeeswas 3.55 percent year-over-year, while wage growth for salariedemployees was 1.92 percent.
  • Small business job growth declined in all U.S. regions for thethird consecutive month. The South is below 99, but remains the topregion for small business employment growth in August. At 97.39,the Northeast continues to be the lowest ranked region, slowing0.15 percent in August and 1.29 percent from last year.
  • Hourly earnings growth continues to be fastest in the West,which is the only U.S. region above 3 percent. The pace of weeklyearnings growth in the Northeast has increased every month in 2019,climbing to 2.74 percent in August.
  • Small business employment growth is strong in Tennessee, Texasand Arizona, with indexes above 100. At 101.02, Tennessee is thenew top state for small business employment growth with the bestone-month and 12-month growth rates. Slowing 2.46 percent duringthe past quarter, Missouri fell below 97, joining New Jersey at thebottom of the state rankings.
  • Illinois, New York and Missouri lead hourly earnings growthwith consistent gains throughout 2019. At 3.53 percent, New Yorkranks second among states for hourly earnings growth. Indiana againranks last among states in growth for both hourly earnings andweekly hours worked, though both trended positively during the pastsix months.
  • Dallas (101.28) and Phoenix (100.49) lead metro job growth by awide margin. At 95.64, Riverside ranked last among metros in smallbusiness job growth for the past six months.
  • San Diego leads metros in hourly earnings growth for the sixthconsecutive month, averaging over four percent so far in 2019.Hourly earnings growth in Chicago ranks second among metros at 4.10percent. At 1.22 percent and 1.24 percent respectively, hourlyearnings growth in Houston and Tampa trails among metros.
  • Across industries, small business employment growth in allsectors fell modestly in August. Below 98 and down 1.33 percentduring the past quarter, leisure and hospitality is now rankedahead of only trade, transportation, and utilities; andmanufacturing.
  • Leisure and hospitality leads industries in hourly earningsgrowth, logging stable growth at 4.54 percent. Weekly hours workedwere negative year-over-year, but improved during the past quarter.Education and health services has the lowest wage growth amongsectors, rising slightly above 1 percent, though it has been stablein recent months.

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Katie Kuehner-Hebert

Katie Kuehner-Hebert is a freelance writer based in Running Springs, Calif. She has more than three decades of journalism experience, with particular expertise in employee benefits and other human resource topics.