Employees of Small Businesses Stand to Benefit from the Positive Trend in Both Wages and Hours Worked in 2021
Paychex and IHS Markit released the February 2021 Small Business Employment Watch, indicating small business hiring is relatively stable, with the Small Business Jobs Index modestly declining by 0.03% to 93.97, 4.43% below pre-pandemic levels. Positive trends include hourly earnings growth at 2.91% and weekly earnings growth surpassing 3% for the first time since September 2020. Despite some regional differences, construction shows strong job growth, leading all sectors.
- Hourly earnings growth increased to 2.91%.
- Weekly earnings growth rose to 3.26%, surpassing 3% for the first time since September 2020.
- Fifteen of the 20 states analyzed showed positive weekly hours worked growth.
- Small Business Jobs Index is down 4.43% compared to a year ago.
- The national index represents a new low with only a 0.03% moderation.
ROCHESTER, N.Y., March 2, 2021 /PRNewswire/ -- The latest Paychex | IHS Markit Business Employment Watch shows that small business hiring held mostly steady in February. The Small Business Jobs Index moderated -0.03 percent to 93.97. Wages are trending in a positive direction to begin 2021. Both hourly earnings and weekly hours worked had two consecutive months of growth. Hourly earnings growth increased to 2.91 percent, and hours worked growth improved 0.37 percent. Weekly earnings growth also rose above three percent for the first time since September 2020.
"The Small Business Jobs Index remains relatively flat once again this month and is 4.43 percent below its pre-pandemic level from a year ago," said James Diffley, chief regional economist at IHS Markit.
"The increase in hours worked and earnings is a positive indicator for small businesses, a segment that has struggled throughout the COVID-19 pandemic to maintain staff at their previous pay and hours. However, there is still support needed for these entrepreneurs and their employees," said Martin Mucci, Paychex president and CEO. "Last week, the Biden Administration established new guidance so businesses with 20 employees or less can apply exclusively for Paycheck Protection Program (PPP) loans for the next week. We look forward to helping many of these small businesses take advantage of this opportunity and quickly apply for this funding through our PPP loan estimator and forgiveness tools in Paychex Flex®."
The monthly report, widely considered an industry benchmark, draws payroll data of approximately 350,000 Paychex clients to gauge small business wage and employment trends on a national, regional, state, metro, and industry basis.
In further detail, the February report showed:
- Fifteen of the 20 states analyzed have positive weekly hours worked growth in February.
- The South ranks first among regions in small business employment growth, but last in earnings and hours worked growth.
- The Northeast ranks last among regions in small business employment growth, but first in earnings and hours worked growth.
- Florida and Texas remain the top-ranked states for job growth, retaining a wide lead with index levels slightly below 97.
- Tampa's jobs index surged 0.90 percent in February, making it the top-ranked metro for small business job growth.
- Manufacturing showed the most substantial job growth increase among industries in February, up 0.36 percent.
The complete results for February, including interactive charts detailing all data at a national, regional, state, metro, and industry level, are available at www.paychex.com/watch. Highlights are available below.
Note: Data presented for the month of January was collected between January 15, 2021 and February 18, 2021.
National Jobs Index
- The Small Business Jobs Index slowed 0.03 percent from last month to 93.97.
- Though the national index moderated just -0.03 percent, February's results represent a new low.
- Small business employment growth is down 4.43 percent from a year ago.
National Wage Report
- Hourly earnings growth increased to 2.91 percent in February. One-month annualized growth spiked to 3.74 percent.
- Weekly hours worked growth continued to rise, starting the year with two consecutive months of positive growth.
- Weekly earnings growth rose to 3.26 percent in February. It's the first time growth has surpassed three percent since September 2020.
Regional Jobs Index
- The South is again the top-ranked region and is more than one point higher (95.34) than the next highest-ranked region, the Midwest (94.20).
- The Northeast ranks last among regions at 93.11 and has seen the largest decline from a year ago, down 5.29 percent.
- The Midwest was the only region to increase in February, up 0.15 percent.
Regional Wage Report
- The South ranks first among regions in small business employment growth, but last in earnings and hours worked growth. The South is the only region with weekly earnings growth below two percent and negative weekly hours worked growth.
- The Northeast ranks last among regions in small business employment growth, but first in earnings and hours worked growth. The Northeast is the only region with hourly earnings growth above four percent and has the strongest weekly hours worked growth.
State Jobs Index
- Florida and Texas remain the top-ranked states, retaining a wide lead with index levels slightly below 97.
- Wisconsin fell 0.48 percent in February to 92.85, joining Virginia, New York, and Washington among the states with the lowest employment growth levels.
- Virginia has the weakest growth rates among states, down 0.52 percent from last month and 7.51 percent from last year.
Note: Analysis is provided for the 20 largest states based on U.S. population.
State Wage Report
- Fifteen of the 20 states analyzed have positive weekly hours worked growth in February.
- Massachusetts overtook New Jersey as the top-ranked state for hourly earnings growth in February.
- Four states, Texas, Tennessee, North Carolina, and Illinois, have hourly earnings growth below two percent.
Note: Analysis is provided for the 20 largest states based on U.S. population.
Metropolitan Jobs Index
- Tampa's index surged 0.90 percent in February, making it the top-ranked metro for small business job growth.
- Seattle, San Francisco, and Washington have the weakest index levels among metros, each below 92.
- Houston's index spiked 1.15 percent in February. However, the increase will likely be offset due to the fallout of the recent winter storm.
Note: Analysis is provided for the 20 largest metro areas based on U.S. population.
Metropolitan Wage Report
- Riverside, CA leads metros in hourly and weekly earnings growth. One-month annualized growth is up double-digits for both measures, likely due to the state's recent minimum wage increase.
- Texas metros Dallas and Houston rank last among metros in hourly earnings growth, both below 1.50 percent.
- Hourly earnings growth in Boston hit a new ten-year high in February at 4.86 percent.
Note: Analysis is provided for the 20 largest metro areas based on U.S. population.
Industry Jobs Index
- Construction remains a bright spot throughout the pandemic. February marks the industry's tenth consecutive month as the top-ranked sector.
- Leisure and Hospitality avoided further declines in February but remained down more than eleven percent from last year.
- Manufacturing had its best one-month gain since last May and is up 0.36 percent.
Note: Analysis is provided for seven major industry sectors. Definitions of each industry sector can be found here. The Other Services (excluding 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
- Construction is not only leading in job growth, it's seeing stable hourly earnings growth as well, reaching 3.62 percent in February and averaging 3.62 percent during the past year.
- Weekly hours worked growth in Leisure and Hospitality bottomed out in December at -4.14 percent. It's now recovered two percent during January and February to -2.14 percent.
Note: Analysis is provided for seven major industry sectors. Definitions of each industry sector can be found here. The Other Services (excluding 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 payroll, human resource, insurance, and benefits outsourcing solutions for small-to medium-sized businesses, and IHS Markit, a world leader in critical information, analytics, and expertise. Focused exclusively on small business, 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 solutions for payroll, benefits, human resources, 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 more than 45 years of industry expertise, Paychex served more than 680,000 payroll clients as of May 31, 2020 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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SOURCE Paychex, Inc.
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