Small Business Jobs Index Dips in June, Rate of Wage Growth Continues to Moderate

Rhea-AI Summary

The rate of small business hiring slowed in June as hourly earnings growth decelerated to 4.02%. The national Small Business Jobs Index registered 99.21 in June, virtually unchanged so far in 2023.

Leisure and hospitality sector continues to struggle to hire back to pre-pandemic levels

ROCHESTER, N.Y.--(BUSINESS WIRE)-- The rate of small business hiring slowed modestly in June as hourly earnings growth across the U.S. decelerated to 4.02% from 4.24% in May, according to the Paychex | IHS Markit Small Business Employment Watch. The national Small Business Jobs Index — which measures the rate of small business job growth in the U.S. — registered 99.21 in June, virtually unchanged so far in 2023.

At 99.21, the national jobs index decreased 0.24% in June, while hourly earnings growth moderated further to 4.02%. (Graphic: Business Wire)

“Hourly earnings gains slowed to 4.02%, in line with a gradually slowing rate of inflation,” said James Diffley, chief regional economist, S&P Global Market Intelligence.

“Our June data suggests small business employment trends are following greater economic patterns, with slowing hourly wage gains aligning with continued declining inflation – a positive sign for businesses,” said John Gibson, Paychex president and CEO. “A moderation in job growth signals that the competitive hiring environment continues. This is especially true in leisure and hospitality, as these employers appear to once again be struggling to find people to fill open positions. Now more than ever, it is important for businesses to improve their operational efficiency and offer competitive employee benefits.”

In further detail, the June report shows:

• At 99.21, the national jobs index decreased 0.24% in June. Overall, employment growth slowed 0.51% during the second quarter of 2023 after increasing in the first three months of 2023. The index remains a full point higher than the year leading up to the pandemic (March 2019-February 2020).
• Hourly earnings growth moderated further to 4.02%, while one-month annualized hourly earnings growth is now below three percent (2.99%) for the first time since 2020.
• The South continues to lead small business employment growth among regions for the 15^th consecutive month at 100.12, down 0.35%. The South also leads hourly earnings growth by a small margin.
• Texas (4.91%) continues to report the strongest hourly earnings growth among the 20 largest states, though growth is decelerating.
• At 101.89, Houston ranks first among metros for small business employment growth for the eighth consecutive month.
• At 4.81%, leisure and hospitality is again first among sectors for hourly earnings growth and is the only sector to report an increase in hourly earnings growth from May to June.

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 June 2023, including interactive charts detailing all data, are available at www.paychex.com/watch. Highlights are available below.

June 2023 Paychex | IHS Markit Small Business Employment Watch

National Jobs Index

• At 99.21, the national index is down 0.24% in June and 1.58% from a year ago.
• The pace of small business employment growth slowed 0.51% during the second quarter of 2023, following a 0.35% increase during the first quarter of 2023.

National Wage Report

• Hourly earnings growth decelerated further to 4.02% in June.
• One-month annualized hourly earnings growth is below three percent (2.99%) for the first time since 2020.
• At 4.00%, weekly earnings growth is unchanged from last month as weekly hours worked growth levels off (-0.09%).

Regional Jobs Index

• Despite slowing 0.35% in June, the South (100.12) continues a 15-month streak leading small business employment growth among regions.
• Every region’s index decreased in June. The Northeast (98.68) fell to the lowest rank among regions. At 98.73, the West declined just 0.13%, leaving last place for the first time since October 2022.

Regional Wage Report

• The South (4.15%) leads hourly earnings growth among regions, though all other regions trail closely behind.
• Weekly earnings growth is just above four percent for all four regions in June.
• The Midwest (0.13%) ranks first among regions for weekly hours worked growth.

State Jobs Index

• Despite leading the pace of small business job growth among states for the past year, North Carolina’s index (100.96) is below 101 for the first time in two years as the state’s rapid gains are decelerating in 2023.
• At 98.28, New York is to last among the 20 largest states for small business job growth in June. Neighboring New Jersey is not far behind, ranked 19^th at 98.37.
• With the strongest one-month (0.36%) and 12-month (1.37%) change rates among states, Tennessee has improved to third among states at 100.50 in June.

State Wage Report

• At 4.91%, Texas continues to report the strongest hourly earnings growth among states, though growth is decelerating. The state’s hourly earnings growth ended 2022 above six percent (6.22%) but quickly dropped below five percent (4.91%) in the first half of 2023.
• Wisconsin (4.77%) and Florida (4.48%) trail Texas (4.91%) for the top three-ranked states for hourly earnings growth.
• Georgia ranks in the bottom two among states for both earnings and hours worked growth. At 2.83%, Georgia is the only state with weekly earnings growth below three percent.

Metropolitan Jobs Index

• At 101.89, Houston ranks first among metros for the eighth consecutive month.
• Baltimore’s index is up 0.59% to 100.13, its highest level since 2018. Up 0.35% from a year ago, Baltimore is the only metro with a positive 12-month change rate.
• Miami’s index gains 0.31% in June to 100.98, second among metros.

Metropolitan Wage Report

• Riverside (4.92%) is now the top-ranked metro for hourly earnings growth, overtaking Texas metros Dallas (4.82%) and Houston (4.81%).
• At 2.87%, San Francisco ranks last among metros for hourly earnings growth and is the only metro with growth below three percent.
• Baltimore has the strongest weekly hours worked growth rate among metros (0.56%).

Industry Jobs Index

• At 99.63, leisure and hospitality is down 0.89% in June and 3.63% from last year. The leisure and hospitality index industry’s index is below 100 for the first time in two years.
• Education and health services’ index remains strong (100.69), reporting the best 12-month change rate (0.29%) among industries.

Industry Wage Report

• At 4.81%, leisure and hospitality is again the top-ranked sector for hourly earnings growth. Leisure and hospitality is also the only sector to report an increase in hourly earnings growth from May to June.
• Construction remains the top-ranked sector in weekly earnings growth (4.84%) and weekly hours worked growth (0.44%).
• Other services (except public administration) ranks last among sectors in hourly earnings (3.35%), weekly earnings (2.97%), and weekly hours worked growth (-0.45%).

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 S&P Global Market Intelligence, a Division of S&P Global (NYSE: SPGI), which merged with IHS Markit in 2022 and is a provider of information services and solutions to global markets. 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 an industry-leading HCM company delivering a full suite of technology and advisory services in human resources, employee benefit solutions, insurance, and payroll. The company serves approximately 740,000 customers in the U.S. and Europe and pays one out of every 12 American private sector employees. The more than 16,000 people at Paychex are committed to helping businesses succeed and building thriving communities where they work and live. To learn more, visit paychex.com and stay connected on Twitter and LinkedIn.

About S&P Global Market Intelligence
At S&P Global Market Intelligence, we understand the importance of accurate, deep and insightful information. Our team of experts delivers unrivaled insights and leading data and technology solutions, partnering with customers to expand their perspective, operate with confidence, and make decisions with conviction.

S&P Global Market Intelligence is a division of S&P Global (NYSE: SPGI). S&P Global is the world’s foremost provider of credit ratings, benchmarks, analytics and workflow solutions in the global capital, commodity and automotive markets. With every one of our offerings, we help many of the world’s leading organizations navigate the economic landscape so they can plan for tomorrow, today. For more information, visit www.spglobal.com/marketintelligence.

View source version on businesswire.com: https://www.businesswire.com/news/home/20230705068435/en/

Media

Chris Muller

Paychex, Inc.

585-338-4346

cmuller@paychex.com

@Paychex

Kate Smith

S&P Global Market Intelligence

+1 781-301-9311

katherine.smith@spglobal.com

Source: Paychex, Inc.