The South remains the strongestregion for small business job growth, while growth was mostconsistent in the Northeast. (Photo: Shutterstock)

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Workers at small businesses ended 2019 with earnings growth atan "all-time high," according to the Paychex-IHS Markit Small Business Employment Watch for December.

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The number of hours worked at small businesses last month hadthe strongest gains since 2012, pushing weekly earnings growth to4.13 percent, a new all-time high for employees of smallbusinesses, according to the report. The pace of small businessemployment growth remains consistent, with the national jobs indexincreasing slightly (0.06 percent) in December to 98.16.

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Related: Small businesses feeling good about currenteconomy

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"Small business job gains have flattened in the second half ofthe year as labor markets prove very tight," says James Diffley,chief regional economist at IHS Markit. "In response, weeklyearnings have accelerated, surging from 2.49 percent mid-year to4.13 percent at year-end."

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"The new high seen in weekly earnings growth this month iscertainly positive news for the employees of small businesses,"adds Martin Mucci, Paychex president and CEO. "Not only arebusinesses raising wages, but they're also increasing hours fortheir current employees, a sure sign employers are responding tothe pressures of the tight labor market."

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It's not a surprise that small businesses are increasing wagesand hours for workers writes HR Dive, citing a May 2019 TD Bank survey​ thatfound owners of small and medium businesses were ​optimistic abouttheir growth prospects.

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"It's also not surprising that small and medium businesses wouldbe at the forefront of such a change," HRDive writes. "They've beenquicker to raise wages historically."

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Drilling down further into Paychex-IHS Markit's report:

  • The South remains the strongest region for small business jobgrowth at 98.87, despite experiencing a one-month decline inDecember (the only region to do so). Small business job growth wasmost consistent in the Northeast throughout 2019, moderating just0.38 percent from the previous year.
  • At 3.68 percent, the West leads hourly earnings growth amongregions, trailed closely by the Northeast (3.44 percent). The gapin earnings among regions is growing as the South and Midwest havethe lowest hourly and weekly earnings as well as the weakest growthrates.
  • Among states, Tennessee remains the top state for smallbusiness job growth with an index level of 100.65, up 2.11 percentyear-over-year. Ohio and Michigan each posted large one-month gainsin December, more than 0.40 percent, to move into seventh and tenthplace among states, respectively. New York joins Washington amongthe states with the lowest index levels, now below 97.
  • New York and California lead earnings growth among states, bothabove four percent in hourly earnings and five percent in weeklyearnings. Texas and Arizona rank among the top three states in jobgrowth, but are last in hourly earnings growth, both below twopercent.
  • Among metropolitan areas, Detroit, at 98.10, had the strongestone-month increase in December (0.83 percent). Denver (99.44) hasposted strong back-to-back gains and now trails only Dallas(100.21).
  • Hourly earnings growth ranges from 4.84 percent in Los Angelesto 1.19 percent in Tampa. San Francisco's weekly earnings toppedseven percent growth in December, aided by a 1.80 percent increasein weekly hours worked, best among metros.
  • Across industries, small business employment growth in leisureand hospitality increased 0.29 percent in December to 97.70. Thetop three ranked sectors all slowed during the past quarter, whilethe bottom five sectors posted positive gains.
  • Leisure and hospitality ranks first in all three wage growthcomponents, hourly and weekly earnings as well as weekly hoursworked. Education and health services is the only industry belowtwo percent hourly earnings growth.

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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.