Hourly Earnings Growth Continues to Moderate
Paychex reports a moderation in hourly earnings growth for U.S. small business workers, dropping to 5.01% in October, down from 5.15% in May. The Small Business Jobs Index fell by 0.32% to 99.43, marking its lowest level since July 2021. Weekly earnings growth rose 4.88%, with hours worked up 1.49%. Notably, Hurricane Ian adversely impacted Florida's labor market, leading to negative growth in hours worked and earnings. Despite regional challenges, the South continues to lead in employment growth.
- Weekly earnings growth increased for the eighth consecutive month to 4.88%.
- One-month weekly hours worked growth rose to 1.49%, nearing a two-year high.
- The South remains the leading region for small business employment growth.
- Hourly earnings growth moderated to 5.01%, down from 5.15%.
- Small Business Jobs Index decreased by 0.32% to 99.43, the lowest since July 2021.
- Florida's weekly hours worked growth fell sharply to -5.46%, resulting in negative earnings growth.
Paychex data also shows effects of Hurricane Ian on labor market conditions in Florida
ROCHESTER, N.Y., Nov. 1, 2022 /PRNewswire/ -- The pace of hourly earnings growth for U.S. small business workers moderated for the second consecutive month to 5.01 percent, according to the latest Paychex | IHS Markit Small Business Employment Watch. One-month annualized hourly earnings growth stands below four percent. The Small Business Jobs Index, which measures the rate of small business job growth, slowed 0.32 percent in October to 99.43.
"Hourly earnings growth for workers of U.S. small businesses may be cooling, with growth slowing from 5.15 percent in May to 5.01 percent in October," said James Diffley, chief regional economist at IHS Markit. "Small business job conditions slid, notably in the Northeast, down 0.66 percent for the month."
"The compensation landscape is shifting. Hourly earnings growth remains at five percent, but is slowing," said John Gibson, Paychex president and CEO. "At the same time, we've seen a significant increase in hours-worked in recent months, possibly a sign that small businesses are adapting to labor market pressures and looking to leverage existing staff. The growth in hours worked is having a positive impact on weekly earnings growth, which increased to 4.88 percent in October."
In further detail, the October report showed:
- One-month weekly hours worked growth increased to 1.49 percent in October, nearing its highest level in more than two years.
- Weekly earnings growth increased for the eighth consecutive month to 4.88 percent.
- Small business employment growth slowed in the Northeast, falling 0.66 percent in October.
- Despite impacts from Hurricane Ian on Florida, the South continues to lead small business employment growth and was the only region to improve in October.
- North Carolina remained the top state for small business job growth; Florida was once again the top state for worker hourly earnings growth.
- Dallas continues to lead U.S. metros in small business job growth and hourly earnings growth for workers.
- Other services (except public administration) remained the top sector for job growth in October at 102.15.
Analysis on the impact of Hurricane Ian reveals:
- Weekly hours-worked growth fell sharply in Florida, with one-month annualized weekly hours-worked falling to -5.46 percent, pushing its ranking last among states.
- Due to the drop in hours-worked, one-month annualized weekly earnings growth in Florida turned negative (-1.36 percent).
- In Tampa, the closest metro to the impact zone, one-month annualized weekly hours-worked growth declined to -6.22 percent.
Paychex 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 October, including interactive charts detailing all data, are available at www.paychex.com/watch. Highlights are available below.
- The national index (99.43) is down 0.32 percent from last month and 1.01 percent from last year.
- After slowing for eight consecutive months (from 101.33 in February 2022 to 99.43 in October 2022), the national index is at its lowest level since July 2021.
- Hourly earnings growth moderated to 5.01 percent in October from a revised 5.02 percent in September. One-month annualized growth remained below 4 percent.
- One-month weekly hours worked growth increased to 1.49 percent in October, nearing its highest level in more than two years.
- At 4.88 percent, weekly earnings growth increased for the eighth consecutive month.
- At 100.59, the South continued to lead all regions in small business employment growth for the seventh consecutive month. The region was the only one to improve its job index in October (0.05 percent).
- The Northeast fell to 98.93 (-0.66 percent) in October, making it the last among regions for the first time since June 2021.
- The South led regions in hourly earnings growth (5.52 percent) for the seventh consecutive month.
- The Northeast had the weakest hourly earnings growth (4.62 percent) but is the only region with positive weekly hours-worked growth (0.04 percent).
- Now at
$32.76 , hourly earnings in the West increased$1.57 (5.05 percent) during the past year.
- At 102.34, North Carolina led all states in small business job growth for the fourth straight month. The North Carolina jobs index has topped 102 for the past year, indicating strong and consistent job growth.
- Missouri (0.91 percent) and Tennessee (0.49 percent) had the best one-month gains among states in October.
- New Jersey (-1.14 percent), Pennsylvania (-0.80 percent), and New York (-0.68 percent) suffered the largest one-month losses among states in October.
Note: Analysis is provided for the 20 largest states based on U.S. population.
- Florida (6.60 percent), followed by Missouri, Texas, and Indiana, all had hourly earnings growth above six percent in October.
- Virginia and Michigan were the only two states with hourly earnings growth below 4 percent in October.
- Likely a result of Hurricane Ian, weekly hours-worked growth in Florida fell to last among states in October and one-month annualized weekly earnings growth turned negative (-1.36 percent).
Note: Analysis is provided for the 20 largest states based on U.S. population.
- Dallas (103.43) and Houston (102.44) ranked first and second for metro job growth for the fifth consecutive month. Both metros' indexes were more than a point higher than all others.
- Philadelphia (99.04) and New York (98.86) fell sharply, with job growth rates in both dropping 1.03 percent in October.
Note: Analysis is provided for the 20 largest metro areas based on U.S. population.
- Despite slowing in October, Dallas led metros in hourly earnings growth (6.89 percent) for the eighth consecutive month, despite slowing in October.
- Washington and Detroit were the only two metros with hourly earnings growth below 4 percent in October.
- Due to the impact of Hurricane Ian on the Tampa metro, one-month annualized weekly hours-worked growth declined to -6.22 percent.
Note: Analysis is provided for the 20 largest metro areas based on U.S. population.
- Other services (except public administration) slowed 0.51 percent in October. Still, at 102.15, it remained the top industry for the fifth consecutive month.
- The education and health services index remained flat in October, while all other sectors slowed.
- The trade, transportation, and utilities index decreased 0.68 percent to 97.79, joining manufacturing (97.49) and financial activities (97.35) with an index below 98.
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.
- Other services (7.58 percent) and leisure and hospitality (6.44 percent) led sectors in hourly earnings growth in October.
- Construction led sectors in weekly hours-worked growth, up 0.31 percent year-over-year, boosting weekly earnings growth to 5.54 percent.
- At 4.21 percent, education and health services' hourly earnings reached a new record level since reporting began in 2011. Nevertheless, growth has been the weakest since September 2021.
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, dry cleaners, 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.
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.
Paychex, Inc. (Nasdaq:PAYX) is a leading provider of integrated human capital management solutions for human resources, payroll, benefits, and insurance services. By combining innovative software-as-a-service technology and mobility platform with dedicated, personal service, Paychex empowers business owners to focus on the growth and management of their business. Backed by 50 years of industry expertise, Paychex serves more than 730,000 payroll clients as of May 31, 2022 in the U.S. and Europe, and pays one out of every 12 American private sector employees. Learn more about Paychex by visiting www.paychex.com and stay connected on Twitter and LinkedIn.
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
Chris Muller
Paychex, Inc.
+1 585-338-4346
cmuller@paychex.com
@Paychex
Kate Smith
IHS Markit
+1 781-301-9311
katherine.smith@ihsmarkit.com
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SOURCE Paychex, Inc.
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