The "Paychex | IHS Markit Small Business Employment Watch" was created by a team of highly qualified data scientists at Paychex, with input and consultation from IHS Markit. Its monthly reports serve as a barometer of labor market trends with a specific focus on insights from small businesses across the US.
Each month, Frank Fiorille, VP of Risk, Compliance and Data Analytics at Paychex will provide a deep dive into the latest employment data, sharing key trends, highlights from the results, job market implications and predictions for the month ahead.
What were the main takeaways from the April Small Business Employment Watch?
For the 11th consecutive month, the “Small Business Employment Watch” showed that hourly earnings growth continued to advance for workers in U.S small businesses, reaching 4.85% YOY growth. The national small business jobs index remained near its recent record high, moderating 0.14% in April to 101.14. While there was a modest slowing in job gains in April, the state of small business employment remains strong.
What trends the report shows in terms of employment rate and wages?
Similar to last month’s report, the April report continues to show a pattern of accelerated wage growth. For the second consecutive month, annual weekly earnings growth stood at above four percent. At $30.10 per hour, hourly earnings have increased 4.85% ($1.39 per hour) since April 2021.
Texas hit a record for both hourly earnings growth (5.12%) as well as weekly earnings growth (5.18%) in April. This long streak of wage growth may continue as employers face pressure to pay employees increasingly higher wages to attract and retain talent.
Were there any standouts or surprises in the results?
Texas reclaimed its No. 1 spot on the list for small business hiring growth, overtaking North Carolina, and achieved record high hourly earnings growth in April. This state’s return to the No. 1 spot for hiring can be credited, in part, to Dallas’ eighth consecutive month as the top-performing metro for job growth.
To learn more about the ongoing economic boom in the State of Texas, watch a recent roundtable featuring business and government officials in Texas, which provides up-to-date information on programs and opportunities to assist Texas business owners in managing and growing their businesses.
Which industries showed growth/declines in terms of employment and wages?
While leisure and hospitality lead the sectors in both small business job growth and hourly earnings growth by a significant margin, the industry did experience the largest slowdown in job growth for the third consecutive month, -0.82%.
Still, the small business employment growth rate in leisure and hospitality remains well ahead of other sectors. Construction saw the highest 12-month weekly hours worked growth (0.37%), improving for the ninth consecutive month.
Any predictions or thoughts for next month’s report?
With the rapid growth in hiring, the primary question among experts and analysts revolves around whether we have reached a peak or will job growth either plateau or decrease in the coming months. While wages may continue to rise, we may see another slight deceleration in job growth next month.
Is there anything accountants should be aware of as they advise their clients with this month's results in mind?
Understanding the current dynamics of the labor market and the competitive hiring landscape is key for accountants and business owners. Perhaps most importantly in today’s candidate-driven labor market, businesses must understand what they need to provide in areas such as compensation, benefits, and work schedules to give them an edge in recruiting and retaining employees.
Additionally, accountants with clients in various states should be aware of the unique labor rules and compliance regulations in each state to keep clients informed of their employer-employee obligations.
For a full breakdown of the small business hiring and wage insights available from the "Paychex | IHS Markit Small Business Employment Watch," visit www.paychex.com/watch.
Frank Fiorille is VP of risk management, compliance and data analytics at Paychex. Fiorille serves as one of the chief stewards of risk for the company, and he leads the implementation of all aspects of the risk function, including processes, tools, and systems to identify, assess, measure, manage, monitor, and report risks. In addition to his overall risk management responsibilities, Frank heads compliance, government relations, and data science at Paychex.
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