Small Business Hiring Maintains Pace; Workers Continue to See Stronger Wage Gains in February

Rhea-AI Summary

According to the latest Paychex | IHS Markit Small Business Employment Watch, national small business job growth remained stable in February, holding the jobs index at 101.33, a 7.83% increase year-over-year. Hourly earnings growth also reached a record high of 4.82% year-over-year. While employment gains are becoming less reliant on the leisure and hospitality sectors, North Carolina has emerged as the top state for small business job growth. Dallas remains the leading metro area for hiring. The report suggests ongoing recovery and wage growth for small businesses.

Positive

• National jobs index remained stable at 101.33, a 7.83% increase from the previous year.
• Hourly earnings growth reached a new record of 4.82% year-over-year.
• Broad-based employment growth is less reliant on the leisure and hospitality sector.
• North Carolina surpassed Texas as the top state for small business job growth.
• Dallas extended its leading position for small business hiring for the sixth month.

Negative

• The national jobs index remained unchanged after eight consecutive monthly increases, indicating potential stagnation.
• Weekly hours worked have decreased by 0.80% year-over-year, suggesting reduced labor demand.

ROCHESTER, N.Y., March 1, 2022 /PRNewswire/ -- National small business job growth remained at consistent levels in February and hourly earnings growth continued to increase for workers, according to the latest Paychex | IHS Markit Small Business Employment Watch. The national jobs index was unchanged for the month at 101.33, matching the record level set in January and increasing 7.83 percent over the past year. Hourly earnings growth reached a new record high, growing to 4.82 percent year-over-year.

"Small business employment gains maintained their recovery pace in February with broad-based gains now somewhat less reliant on leisure and hospitality jobs," said James Diffley, chief regional economist at IHS Markit.

"U.S. small business job growth and significant hourly earnings increases continue versus last year. The West leads regions for the highest job index result and the South has the highest hourly earnings growth this month, topping five percent," said Martin Mucci, Paychex CEO.

In further detail, the February report showed:

• At 101.33, the Small Business Jobs Index has improved 7.83 percent from last year (93.97).
• Following eight consecutive one-month increases, the Small Business Jobs Index was flat from the previous month.
• Hourly earnings growth continued its nine-month climb from 2.75 percent in May 2021 to 4.82 percent in February 2022.
• One-month annualized hourly earnings growth (6.83 percent) also reached a new record level in February.
• The South leads all regions in hourly earnings growth.
• Leisure and hospitality leads all sectors with 10.40 percent hourly earnings growth.
• North Carolina surpassed Texas as the top state for small business job growth.
• Dallas extended its position for the sixth month as the top metro for small business hiring.

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 February, including interactive charts detailing all data, are available at www.paychex.com/watch. Highlights are available below. 

National Jobs Index

• At 101.33, the small business jobs index has improved 7.83 percent from last year (93.97).
• Following eight consecutive increases, the national index was unchanged and remained at its record level set last month (101.33).
• Though the index continued at its record pace of small business employment growth, the one-month change reported its weakest rate since May 2021.

National Wage Report

• Hourly earnings growth continued its nine-month climb from 2.75 percent in May 2021 to 4.82 percent in February 2022. In addition to the annual growth rate, one-month annualized growth (6.83 percent) also reached a new record level in February.
• Down 0.80 percent year-over-year, weekly hours worked have slowed further in recent months as the one-month annualized growth rate fell to -1.78 percent.

Regional Jobs Index   

• The West continued to rank first among regions, improving to 101.77, the region's 12^th consecutive increase.
• Falling 0.34 percent to 100.33 in February, the Midwest has ranked last for the past eight months and is now more than full point lower than all other regions.

Regional Wage Report   

• The South leads all regions at 5.03 percent hourly earnings growth, though all regions are above four percent.
• Weekly hours worked growth slowed considerably for all regions in February. The Midwest slowed the most from last year, down 1.41 percent.
• With the decrease in weekly hours worked, the West is the only region with weekly earnings growth above four percent.

State Jobs Index

• North Carolina (103.13) surpassed Texas and Arizona for top jobs index among states. North Carolina is the only state above 103 and has increased its rate of small business employment growth 9.43 percent during the past year.
• Tennessee had the largest one-month change among states, 0.81 percent, but remains the lowest-ranked state; Ohio and Tennessee are the only two states with index levels below 100.

Note: Analysis is provided for the 20 largest states based on U.S. population.

State Wage Report

• Best among states, Ohio and North Carolina have hourly earnings growth above six percent.
• With hourly earnings gains of less than four percent, Missouri, Pennsylvania, and Massachusetts trail among states.
• Albeit a very small increase, Texas (0.02 percent) is the only state with positive weekly hours worked growth year-over-year.

Note: Analysis is provided for the 20 largest states based on U.S. population.

Metropolitan Jobs Index 

• At 104.68, Dallas has been above 104 and ranked first among metros for the past six months as the pace of small business job growth has been consistently strong.
• Denver ranks 19^th among metros in February 2022 with an index of 99.26. To offer perspective of how the small business job market has progressed, Denver ranked 3^rd among metros in February 2021 with an index of 96.09.
• While gains in employment growth have been broad-based throughout the pandemic recovery, diverging trends among metros have started to emerge in the February results.

Note: Analysis is provided for the 20 largest metro areas based on U.S. population.

Metropolitan Wage Report

• Led by Denver (5.80 percent), seven metros have hourly earnings growth above five percent.
• Both well above five percent, Florida metros Tampa and Miami trail only Denver in hourly earnings growth, due in part to the significant increase ($1.35/hour) in Florida's minimum wage that occurred at the end of September 2021.
• Four metros are below four percent hourly earnings growth, Houston, Philadelphia, Washington, and Boston.
• Houston is the only metro with positive weekly hours worked growth year-over-year. All metros, however, have negative one-month annualized growth in February.

Note: Analysis is provided for the 20 largest metro areas based on U.S. population.

Industry Jobs Index

• Leisure and hospitality (106.60) remains well ahead of all other sectors, but reported its first decrease (-0.61 percent) since last February.
• Trade, transportation, and utilities reached an index level of 100 for the first time in nearly five years.
•  At 98.41, financial activities remains the weakest among sectors, but recorded its first increase (0.26 percent) in since August 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, drycleaners, and other businesses.

Industry Wage Report 

• Leisure and hospitality leads all sectors with 10.40 percent hourly earnings growth, while trade, transportation, and utilities ranks second at 6.19 percent.
• Education and health services trails all sectors with 3.66 percent hourly earnings growth.
• Construction leads sectors in 12-month weekly hours worked growth (-0.04 percent) and is the only sector with positive one-month annualized growth (0.29 percent).

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
Lisa Fleming
Paychex, Inc.
+1 585-387-6402
lfleming@paychex.com 
@Paychex 

Kate Smith
IHS Markit
+1 781-301-9311
katherine.smith@ihsmarkit.com 

Maggie Pryslak
Mower
+1 585-576-1083
mpryslak@mower.com

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SOURCE Paychex, Inc.

FAQ

What is the current status of small business job growth in February 2022 for PAYX and INFO?

Small business job growth remained stable in February 2022 with the jobs index at 101.33, a 7.83% increase from the previous year.

How much did hourly earnings grow for small businesses in February 2022?

Hourly earnings growth for small businesses reached a record high of 4.82% year-over-year in February 2022.

What state topped the small business job growth index in February 2022?

North Carolina became the top state for small business job growth in February 2022, surpassing Texas.

Which metropolitan area continued to lead in small business hiring in February 2022?

Dallas continued to lead in small business hiring for the sixth consecutive month in February 2022.

What are the implications of the unchanged jobs index for PAYX and INFO?

The unchanged jobs index after eight monthly increases may indicate potential stagnation in small business job growth.