Employees of Small Businesses See Record High Hourly Earnings Growth in November; Job Growth Also Continues to Increase
In November, small business hourly earnings in the U.S. rose 4.07%, marking the highest growth since tracking began a decade ago, according to Paychex's latest report. Small business hiring also increased, with the Jobs Index climbing 0.27% to 100.72. The report highlighted that labor demand is driving wage hikes, with overall wage growth averaging 4.43% in recent months. The South led regional growth, with Texas maintaining its position as the top state for employment growth. However, while the national index showed gains, the rate of growth has begun to slow.
- Hourly earnings growth reached 4.07%, the highest in ten years.
- Small Business Jobs Index rose by 0.27% to 100.72, indicating increased hiring.
- All 20 largest states reported hourly earnings growth above 3%.
- Leisure and hospitality sectors led both earnings and hours worked growth.
- The growth rate of the national jobs index has slowed from 0.50% in October to 0.27% in November.
- The three-month change rate is below one percent for the first time since March 2021.
ROCHESTER, N.Y., Nov. 30, 2021 /PRNewswire/ -- Wage growth reached a new high for the employees of small businesses in the U.S. in November, according to aggregated payroll data of approximately 350,000 Paychex clients with fewer than 50 employees. The data released in the latest Paychex | IHS Markit Small Business Employment Watch shows hourly earnings growth improved to 4.07 percent, the highest level since reporting began ten years ago. Small business hiring also increased for the month, with the Small Business Jobs Index up 0.27 percent in November to 100.72.
"The small business recovery continues with the sixth consecutive month of accelerated hiring," said James Diffley, chief regional economist at IHS Markit.
"The positive gains in hourly earnings growth show that employers are responding to tight labor conditions with higher wages," said Martin Mucci, Paychex CEO. "This growth comes at an opportune time for many Americans who are seeing higher costs for goods this holiday season due to supply chain and inflation pressures."
In further detail, the November report showed:
- The national jobs index reached its highest level since March 2017, although growth slowed from 0.50 percent in October to 0.27 percent in November.
- At a national level, hourly earnings growth has steadily increased, from 2.99 percent in June to 4.07 percent in November.
- Of the 20 largest states based on U.S. population, all have hourly earnings growth above three percent.
- With hourly earnings growth at record levels, weekly earnings growth is also on the rise, increasing by nearly a full percentage point from August (2.54 percent) to November (3.46 percent).
- Leisure and hospitality leads sectors in earnings and hours worked growth for the eighth consecutive month.
- The South regained its lead among regions in small business employment growth, bolstered by the South Atlantic division.
Paychex business solutions reach 1 in 12 American private-sector employees, making the Small Business Employment Watch an industry benchmark. Drawing from the payroll data of approximately 350,000 Paychex clients with fewer than 50 employees, the monthly report offers analysis of national employment and wage trends, as well as examines regional, state, metro, and industry sector activity.
The complete results for November, including interactive charts detailing all data, are available at www.paychex.com/watch. Highlights are available below.
National Jobs Index
- At 100.72, the national index is at its highest level since March 2017, increasing 0.27 percent in November and 6.82 percent from a year ago.
- The national index recorded its sixth consecutive month of gains in November 2021.
- The three-month change rate (0.92 percent) has slowed for the past three months and is the first month below one percent since March 2021.
National Wage Report
- At 4.07 percent in November, hourly earnings growth improved for the sixth consecutive month to another new record level since reporting began ten years ago.
- One-month annualized hourly earnings growth has averaged 4.43 percent during the past six months as labor demand has continued to put upward pressure on wages.
- Weekly earnings growth have increased nearly a full percentage point during the past quarter, from 2.54 percent in August to 3.46 percent in November.
Regional Jobs Index
- Led by the South Atlantic division, the South regained its lead among regions (101.18), gaining 0.26 percent in November.
- At 99.92, the Midwest is the only regional index below 100.
- With the strongest one-month and three-month change rates among regions, the Northeast improved to 100.50, its highest level since 2014.
Regional Wage Report
- The South (4.01 percent) joined the West (4.42 percent) region with hourly earnings growth above four percent.
- Weekly earnings growth in the Northeast has quickly improved during the past quarter, from 1.91 percent in August to 3.60 percent in November.
- All four regions have positive one-month weekly hours worked growth, with the Northeast considerably strong (1.16 percent).
State Jobs Index
- Despite a 0.24 percent slowdown in November, Texas remains the leading state for small business employment growth with an index level of 102.92.
- Virginia, Maryland, and New York had the largest gains in November, though their index levels remain in the bottom half of the state rankings.
- Washington has averaged 1.27 percent growth during the past five months and has improved to sixth place among states in November (101.60). Washington ranked last among states as recently as June.
Note: Analysis is provided for the 20 largest states based on U.S. population.
State Wage Report
- All 20 states analyzed have hourly earnings growth above three percent.
- North Carolina continues to lead states in hourly earnings growth, improving for the 12th consecutive month, from 1.39 percent last November to 5.00 percent this November. North Carolina, however, is last in weekly hours worked growth (-1.42 percent).
- South Atlantic states' Florida and Georgia lead states in weekly earnings growth, 4.31 percent and 3.97 percent, respectively.
- Texas is the only state with positive weekly hours worked growth in November.
Note: Analysis is provided for the 20 largest states based on U.S. population.
Metropolitan Jobs Index
- Dallas remained the top metro for the third consecutive month with an index level above 104.
- At 101.36, Seattle has gained 11.02 percent during the past year, best among metros.
- Washington surged to 100.35 with the largest one-month gain (1.82 percent) among metros.
- Baltimore gained a solid 0.71 percent in November, but remains the weakest metro for small business employment growth with an index of 97.68
- 17 of the 20 metros analyzed have an index level above 100.
Note: Analysis is provided for the 20 largest metro areas based on U.S. population.
Metropolitan Wage Report
- Denver leads metros in hourly earnings growth (5.91 percent), though weekly hours worked growth has quickly decelerated during the past quarter.
- Trailing only Denver, Riverside reported hourly earnings growth of 5.43 percent in November. Weekly earnings growth is much lower (3.81 percent), however, as weekly hours worked growth has been negative during the past quarter.
- 17 of 20 metros have hourly earnings growth above three percent (Baltimore, Philadelphia, and Seattle are below three percent) and 10 of 20 metros have hourly earnings growth above four percent.
Note: Analysis is provided for the 20 largest metro areas based on U.S. population.
Industry Jobs Index
- At 100.21 in November, manufacturing has increased its rate of small business job growth in ten of eleven months so far in 2021.
- Financial activities was the only sector to slow again in November and ranks last at 98.33.
- Continuing to improve rapidly, leisure and hospitality has gained 18.25 percent during the past 12 months bringing its index to 104.23, best among industries.
- Ranked last from April 2020 through April 2021, the leisure and hospitality index has ranked first for the past three months.
Note: Analysis is provided for seven major industry sectors. Definitions of each industry sector can be found here. The other services (except public administration) industry category includes religious, civic, and social organizations, as well as personal services, including automotive and household repair, salons, drycleaners, and other businesses.
Industry Wage Report
- Spiking to 9.20 percent, leisure and hospitality leads sectors in hourly earnings growth for the eighth consecutive month. Leisure and hospitality remains the only sector with positive year-over-year weekly hours worked growth.
- At 5.18 percent, hourly earnings growth in the trade, transportation, and utilities sector reached a new record level for the sixth straight month.
Note: Analysis is provided for seven major industry sectors. Definitions of each industry sector can be found here. The other services (except public administration) industry category includes religious, civic, and social organizations, as well as personal services, including automotive and household repair, salons, drycleaners, and other businesses.
For more information about the Paychex | IHS Markit Small Business Employment Watch, visit www.paychex.com/watch and sign up to receive monthly Employment Watch alerts.
*Information regarding the professions included in the industry data can be found at the Bureau of Labor Statistics website.
About the Paychex | IHS Markit Small Business Employment Watch
The Paychex | IHS Markit Small Business Employment Watch is released each month by Paychex, Inc., a leading provider of integrated human capital management software solutions for human resources, payroll, benefits, and insurance services, and IHS Markit, a world leader in critical information, analytics, and expertise. Focused exclusively on small business with fewer than 50 employees, the monthly report offers analysis of national employment and wage trends, as well as examines regional, state, metro, and industry sector activity. Drawing from the payroll data of approximately 350,000 Paychex clients, this powerful tool delivers real-time insights into the small business trends driving the U.S. economy.
About Paychex
Paychex, Inc. (Nasdaq: PAYX) is a leading provider of integrated human capital management software solutions for human resources, payroll, benefits, and insurance services. By combining its innovative software-as-a-service technology and mobility platform with dedicated, personal service, Paychex empowers small- and medium-sized business owners to focus on the growth and management of their business. Backed by 50 years of industry expertise, Paychex served more than 710,000 payroll clients as of May 31, 2021 across more than 100 locations in the U.S. and Europe, and pays one out of every 12 American private sector employees. Learn more about Paychex by visiting paychex.com and stay connected on Twitter and LinkedIn.
About IHS Markit (www.ihsmarkit.com)
IHS Markit (NYSE: INFO) is a world leader in critical information, analytics and solutions for the major industries and markets that drive economies worldwide. The company delivers next-generation information, analytics and solutions to customers in business, finance and government, improving their operational efficiency and providing deep insights that lead to well-informed, confident decisions. IHS Markit has more than 50,000 business and government customers, including 80 percent of the Fortune Global 500 and the world's leading financial institutions. Headquartered in London, IHS Markit is committed to sustainable, profitable growth.
IHS Markit is a registered trademark of IHS Markit Ltd. and/or its affiliates. All other company and product names may be trademarks of their respective owners © 2021 IHS Markit Ltd. All rights reserved.
Media Contacts
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Paychex, Inc.
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IHS Markit
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