Wage Growth for Workers of U.S. Small Businesses Continues Downward Trend; Job Growth Remains Stable

Rhea-AI Summary

Paychex, Inc. (PAYX) reports that the rate of hourly earnings growth for U.S. small business workers has slowed to 3.48% in November, falling below 3.50% for the first time since July 2021. Hiring at small businesses remains stable but continues to slow from the rate of growth seen at the start of 2023. The South leads the pace of small business job growth among regions for the 20th consecutive month, while the Northeast ranks last among regions.

Positive

• Hourly earnings growth for U.S. small business workers is at 3.48% in November, falling below 3.50% for the first time since July 2021.
• The rate of small business job growth declined 0.18% to 98.59 in November.
• The South leads the pace of small business job growth among regions for the 20th consecutive month.

Negative

• The rate of small business job growth marks the slowest pace of growth so far in 2023.
• The national index is down 0.51% from last quarter and 0.80% from last year.

ROCHESTER, N.Y.--(BUSINESS WIRE)-- The rate of hourly earnings growth for workers at U.S. small businesses has slowed 17 of the past 18 months to 3.48% in November, falling below 3.50% for the first time since July 2021, according to the Paychex Small Business Employment Watch. Hiring at small businesses across the U.S. remains stable but continues to slow from the rate of growth seen at the start of 2023.

Wage growth for employees of U.S. small businesses has slowed for 17 of the last 18 months. The rate of job growth in this segment also declined 0.18% in November to 98.59. (Graphic: Business Wire)

What November’s Report Means

“As we approach the end of 2023, wage growth continues to decline indicating that the actions taken by the Federal Reserve are having the desired effect,” said John Gibson, Paychex president and CEO. “Small business employers continue to add jobs at a more moderate pace than at the start of 2023 but still at a higher rate than pre-pandemic levels. Small businesses continue to show their resilience in the face of difficult capital markets and continued challenges in finding quality highly skilled labor.”

“November’s Small Business Employment Watch data highlights differing market conditions both geographically and by industry sector,” added Frank Fiorille, Paychex vice president of risk, compliance, and data analytics. “For instance, the Education and Health Services, as well as the Construction sector, have both experienced solid job growth throughout 2023. Leisure and Hospitality job growth continues to decline following a period of extensive recovery for the sector since 2020.”

Key Insights

• Slowing for 17 of the past 18 months, hourly earnings growth fell to 3.48% in November.
• The rate of small business job growth declined 0.18% to 98.59 in November.
• Hourly earnings growth in the Leisure and Hospitality sector has steadily slowed during the past two years, declining from 10.95% to 3.79% between January 2022 and November 2023.
• The South leads the pace of small business job growth among regions for the 20^th consecutive month, with an index of 99.36, and was the only region to improve in November (0.10%).
• The Northeast (98.02) continues to rank last among regions and decreased 0.38% in November.

More Information

• Year-over-year weekly hours worked growth (-0.16%) remains negative, though three-month annualized growth climbed to 1.42% in November.
• The West leads regional hourly earnings growth for the sixth-straight month.
• Washington leads states for the fifth consecutive month in hourly earnings growth with a rate of 5.06%.
• Miami leads top U.S. metros in weekly hours worked growth (0.36%) for the seventh consecutive month.
• North Carolina remains the top state for small business job growth in November with an index of 100.68. Texas (100.17) ranks second.
• Houston (101.77) has now led top U.S. metros for small business job growth for a full year. Dallas (98.65) gained 0.84% in November alone, jumping from 18th to eighth among top metros.
• Education and Health Services (0.31%) and Construction (0.28%) have improved their small business employment growth rate.
• Leisure and Hospitality continues its sharp deceleration, dropping 0.56% in November to 97.71. The sector has slowed 3.65% since February (101.41).

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

November 2023 Paychex
Small Business Employment Watch

National Jobs Index

• Declining 0.18% to 98.59 in November, the small business job growth rate slowed for the eighth consecutive month.
• At 98.59, the rate of small business job growth marks the slowest pace of growth so far in 2023.
• The national index is down 0.51% from last quarter and 0.80% from last year.

National Wage Report

• Slowing for 17 of the past 18 months, hourly earnings growth fell to 3.48% in November. Three-month annualized growth reported below three percent in consecutive months for the first time since January 2021.
• With the recent uptrend in weekly hours worked, weekly earnings growth (3.42%) improved from the previous month for the first time since February 2023.
• Weekly hours worked growth (-0.16%) remains negative from a year-over-year perspective, though three-month annualized growth climbed to 1.42% in November.

Regional Jobs Index

• At 99.36, the South leads the pace of small business job growth among regions for the 20^th consecutive month and was the only region to improve in November (0.10%).
• The Midwest (98.68) has ranked second among regions for the past 13 months.
• The Northeast (98.02) continues to rank last among regions and decreased further in November, falling 0.38%.

Regional Wage Report

• Though all regions are now below four percent in November, the West (3.95%) leads regional hourly earnings growth for the sixth-straight month.
• All regions report hourly and weekly earnings above three percent and below four percent in November.
• Weekly hours worked are unchanged from a year ago in the South, which leads all regions.

State Jobs Index

• North Carolina (100.68) held its pace of small business job growth in November and has topped the state rankings for 16 of the past 17 months.
• Ranked second among states in November, Texas (100.17) has ranked among the top three states for small business job growth since September 2020.
• Michigan (97.47) continues its descent, slowing 0.40% in November. Michigan ranks last among states and has fallen the furthest during the past year (2.30%).

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

State Wage Report

• At 5.06%, Washington leads states for hourly earnings growth for the fifth consecutive month. At -0.93%, Washington also ranks last among states for weekly hours worked growth for the seventh consecutive month.
• Ranked first among states in April 2022 at 6.29%, hourly earnings growth has slowed for 19 consecutive months in North Carolina to 3.01% in November 2023.

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

Metropolitan Jobs Index

• At 101.77, Houston has ranked first among metros since November 2022 and has had an index above 101 since August 2021.
• Gaining 0.84% in November to 98.65, Dallas jumped ten spots from 18^th to eighth among states.
• Denver (96.11) remains the weakest metro for the fifth consecutive month and has slowed 3.87% from a year ago.

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

Metropolitan Wage Report

• Seattle ranks first among metros for both hourly earnings (5.01%) and weekly earnings growth (4.38%). Weekly hours worked growth (-0.89%) in Seattle ranks last among metros.
• Atlanta is at the bottom of the metro rankings in November for both hourly earnings growth (2.35%) and weekly earnings growth (2.30%).
• Miami leads metros in weekly hours worked growth (0.36%) for the seventh consecutive month.

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

Industry Jobs Index

• Education and Health Services (100.37) leads the pace of small business job growth among industries for the first time since 2019.
• While most industries have slowed during the past year, Education and Health Services (0.31%) and Construction (0.28%) have improved their small business employment growth rate.
• Leisure and Hospitality continued its sharp deceleration, dropping 0.56% in November to 97.71. The sector has slowed 3.65% since February (101.41).

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.

Industry Wage Report

• Construction leads growth among sectors in hourly earnings (4.10%), weekly earnings (4.29%), and weekly hours worked (0.14%) in November.
• Hourly earnings growth in the Leisure and Hospitality sector has steadily slowed during the past two years, from 10.95% in January 2022 to 3.79% in November 2023.

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 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 Small Business Employment Watch

The Paychex Small Business Employment Watch is released each month by Paychex, Inc. 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 industry benchmark 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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20231205765145/en/

Media

Chris Muller

Paychex, Inc.

585-338-4346

cmuller@paychex.com

@Paychex

Colleen Bennis

Matter Communications

Account Director

585-666-9510

cbennis@matternow.com

Source: Paychex, Inc.

FAQ

What is the rate of hourly earnings growth for U.S. small business workers in November?

The rate of hourly earnings growth for U.S. small business workers is 3.48% in November.

What is the rate of small business job growth in November?

The rate of small business job growth declined 0.18% to 98.59 in November.

Which region leads the pace of small business job growth among regions?

The South leads the pace of small business job growth among regions for the 20th consecutive month.