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

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

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

As a measure of small business job growth, the report's national jobs index fell 0.17 percent from last month, to 98.01. It was a 0.76 percent drop over the past quarter, and a 1.22 percent decline from August 2018.

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

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

Other key findings include:

Broken down by employee type, wage growth for hourly employees was 3.55 percent year-over-year, while wage growth for salaried employees was 1.92 percent.
Small business job growth declined in all U.S. regions for the third consecutive month. The South is below 99, but remains the top region for small business employment growth in August. At 97.39, the Northeast continues to be the lowest ranked region, slowing 0.15 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 weekly earnings 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, Texas and Arizona, with indexes above 100. At 101.02, Tennessee is the new top state for small business employment growth with the best one-month and 12-month growth rates. Slowing 2.46 percent during the past quarter, Missouri fell below 97, joining New Jersey at the bottom of the state rankings.
Illinois, New York and Missouri lead hourly earnings growth with consistent gains throughout 2019. At 3.53 percent, New York ranks second among states for hourly earnings growth. Indiana again ranks last among states in growth for both hourly earnings and weekly hours worked, though both trended positively during the past six months.
Dallas (101.28) and Phoenix (100.49) lead metro job growth by a wide margin. At 95.64, Riverside ranked last among metros in small business job growth for the past six months.
San Diego leads metros in hourly earnings growth for the sixth consecutive month, averaging over four percent so far in 2019. Hourly earnings growth in Chicago ranks second among metros at 4.10 percent. At 1.22 percent and 1.24 percent respectively, hourly earnings growth in Houston and Tampa trails among metros.
Across industries, small business employment growth in all sectors fell modestly in August. Below 98 and down 1.33 percent during the past quarter, leisure and hospitality is now ranked ahead of only trade, transportation, and utilities; and manufacturing.
Leisure and hospitality leads industries in hourly earnings growth, logging stable growth at 4.54 percent. Weekly hours worked were negative year-over-year, but improved during the past quarter. Education and health services has the lowest wage growth among sectors, rising slightly above 1 percent, though it has been stable in recent months.

Read more:

Instant Insights /

Latest trends in the small-business labor market

More From HR Executive

Related Stories

Recommended For You