Worker Hourly Earnings Growth Increases to a Record Level in August; Pace of Small Business Hiring Moderates
In August 2022, U.S. small businesses saw average hourly earnings grow by 5.18%, matching the record from May 2022, with wages at $30.71 per hour, increased by $1.51 year-over-year. However, job growth slowed by -0.20%, dropping the Small Business Jobs Index to 99.94, a decline for six consecutive months. The South region led in job growth and hourly earnings growth, while states like North Carolina and Florida excelled in job and wage increases, respectively.
- Hourly earnings growth reached 5.18%, matching May 2022 record.
- Average wage increased to $30.71, up $1.51 from last year.
- The South region led with a job index of 100.55 and hourly earnings growth of 5.53%.
- Small business job growth declined by 0.20%, marking a slowdown.
- The national jobs index fell below 100 for the first time since September 2021.
ROCHESTER, N.Y., Aug. 30, 2022 /PRNewswire/ -- Workers of U.S. small businesses continue to benefit from higher wages, according to the latest Paychex | IHS Markit Small Business Employment Watch. Average hourly earnings growth increased to 5.18 percent, matching a record set in May 2022. Meanwhile, the pace of job growth at small businesses moderated from the previous month, slowing -0.20 percent. The Small Business Jobs Index stands at 99.94.
"Small business job growth continued to slow in August as the Fed fought inflation with higher interest rates," said James Diffley, chief regional economist at IHS Markit.
"Our August jobs index results reveal a continuation of last month's trend: the demand for workers at U.S. small businesses is high and the supply is low, making it more difficult for small businesses to fill many open positions," said Martin Mucci, Paychex chairman and CEO.
In further detail, the August report showed:
- At
$30.71 per hour, hourly earnings increased by$1.51 in the last 12 months. - At 99.94, the national jobs index fell below 100 for the first time since September 2021.
- The South's Job Index lead continued as it was the only region to top 100 (100.55). The South also led in hourly earnings growth, at 5.53 percent, and weekly earnings growth, at 5.00 percent.
- Small business employment growth in the West slowed 0.30 percent in August and ranked last among regions for the first time since 2020, with West Coast metros San Francisco, San Diego, Riverside, and Seattle all dropping more than two percent during the past quarter.
- North Carolina remained the top state for small business job growth; Florida was once again the top state for worker hourly earnings growth (6.45 percent).
- Dallas continues to lead U.S. metros in small business job growth and hourly earnings growth for workers.
- At 102.89, other services (except public administration) remained the top sector for job growth for the third consecutive month.
Note: 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.
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 August, including interactive charts detailing all data, are available at www.paychex.com/watch. Highlights are available below.
- The national jobs index fell below 100 for the first time since September 2021 following moderations in small business employment during the spring and summer.
- At 99.94, the jobs index slowed each of the past six months. It slowed by 0.20 percent in August and by 1.37 percent since February.
- Hourly earnings growth improved to 5.18 percent in August, matching its May 2022 record. At
$30.71 per hour, hourly earnings increased$1.51 from this time last year. - Though the gains have been modest, weekly earnings growth increased for six straight months, from 3.95 percent in February to 4.54 percent in August.
- The South widened its lead among regions, moderating -0.11 percent in August. At 100.55, the South was the only regional index above 100.
- At 99.54, the jobs index in the West slowed 0.30 percent in August, ranking last among regions for the first time since 2020.
- By slowing just 0.08 percent in August to 99.59, the Midwest increased its position to third among regions. It was the first time the Midwest moved from the lowest spot in 13 months.
- The South led in hourly earnings growth at 5.53 percent. Weekly earnings growth in the region reached 5 percent in August, a new record since reporting began in 2011.
- For the fourth straight month, the Northeast was the only region with hourly earnings growth below five percent (4.58 percent) and weekly earnings growth below four percent (3.92 percent).
- At 102.92, North Carolina widened its lead among states, gaining 0.24 percent in August. North Carolina, Illinois, and Tennessee were the only three states to have a positive three-month change rate.
- At 101.59, Texas slowed 0.45 percent in August and 1.33 percent over the past three months, falling below 102 for the first time in more than a year.
- Arizona showed August's steepest decline (-0.86 percent) as its index dropped below 100 for the first time since March 2021.
Note: Analysis is provided for the 20 largest states based on U.S. population.
- At 6.45 percent, Florida ranked first among states for hourly earnings growth. Six of the 20 states analyzed had hourly earnings growth above 6 percent.
- Texas and Indiana ranked second and third, respectively, among states in both hourly and weekly earnings growth.
- Georgia's weekly hours worked slowed quickly in recent months. The state's one- and three-month annualized growth rates were down 2.71 and 3.78 percent, respectively, both weakest among states.
Note: Analysis is provided for the 20 largest states based on U.S. population.
- At 103.07, Dallas continued to lead metros despite two consecutive decreases in July (-1.34 percent) and August (-0.91 percent). Dallas saw the largest decrease among all metros in August.
- The four weakest metros were all located on the West coast (San Francisco, San Diego, Riverside, and Seattle). Each of their indexes dropped more than 2 percent during the past quarter.
- Up 1.08 percent in August, Denver had the largest one-month gain among metros by far, boosting its index to 100.70.
Note: Analysis is provided for the 20 largest metro areas based on U.S. population.
- Dallas led metros in hourly earnings growth at 7.60 percent, increasing for the 20th consecutive month.
- Hourly earnings growth topped 4 percent for all 20 metros analyzed. Washington ranked last (4.03 percent), followed closely by New York (4.07 percent).
- Though Detroit reported strong small business employment growth, weekly earnings growth (3.04 percent), and weekly hours-worked growth (-1.09 percent) were last among metros.
Note: Analysis is provided for the 20 largest metro areas based on U.S. population.
- Other services (except public administration) remained the top sector in August for the third straight month. The sector had slowed over the past five months, but the pace of job gains remained strong at 102.89.
- Leisure and hospitality slowed for the seventh consecutive month (from 107.25 in January to 100.59 in August).
- At 98.04, manufacturing fell two spots, becoming the second weakest sector analyzed after decelerating 1.70 percent over the last quarter.
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 (except public administration) led hourly earnings growth among industries at 7.48 percent in August. One- and three-month annualized growth rates were higher at 8.07 percent and 7.84 percent, respectively.
- Hourly earnings growth in leisure and hospitality slowed for the seventh straight month to 6.37 percent, though the July to August decrease was not as sharp as in previous months.
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
Lisa Fleming
Paychex, Inc.
+1 585-387-6402
lfleming@paychex.com
@Paychex
Kate Smith
IHS Markit
+1 781-301-9311
katherine.smith@ihsmarkit.com
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