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% over the past year. Hourly earnings growth reached a new record high, growing to 4.82% year-over-year.
James Diffley, chief regional economist at IHS Markit, says that small business employment gains maintained their recovery pace in February with broad-based gains now somewhat less reliant on leisure and hospitality jobs.
In further detail, the February report showed:
- At 101.33, the Small Business Jobs Index has improved 7.83% 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% in May 2021 to 4.82% in February 2022.
- One-month annualized hourly earnings growth (6.83%) 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% 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 one 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.
February 2022 Paychex | IHS Markit Small Business Employment Watch
National Jobs Index
- At 101.33, the small business jobs index has improved 7.83% 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% in May 2021 to 4.82% in February 2022. In addition to the annual growth rate, one-month annualized growth (6.83%) also reached a new record level in February.
- Down 0.80% year-over-year, weekly hours worked have slowed further in recent months as the one-month annualized growth rate fell to -1.78%.
Regional Jobs Index
- The West continued to rank first among regions, improving to 101.77, the region’s 12th consecutive increase.
- Falling 0.34% 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.
Note: %ages displayed in the regional heat map reflect 12-month changes.
Regional Wage Report
The South leads all regions at 5.03% hourly earnings growth, though all regions are above 4%.
Weekly hours worked growth slowed considerably for all regions in February. The Midwest slowed the most from last year, down 1.41%.
With the decrease in weekly hours worked, the West is the only region with weekly earnings growth above 4%.
Note: Percentages displayed in the regional heat map reflect 12-month changes
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% during the past year.
- Tennessee had the largest one-month change among states, 0.81%, 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 the U.S. population. The chart’s dark blue bars reflect the index level and the light blue diamond reflects the 12-month change.
State Wage Report
- Best among states, Ohio and North Carolina have hourly earnings growth above six %.
- With hourly earnings gains of less than four %, Missouri, Pennsylvania, and Massachusetts trail among states.
- Albeit a very small increase, Texas (0.02 =%) is the only state with positive weekly hours worked growth year-over-year.
Note: Analysis is provided for the 20 largest states based on US 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 19th 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 3rd 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. The chart’s dark blue bars reflect the index level and the light blue diamond reflects the 12-month change.
Metropolitan Wage Report
- Led by Denver (5.80%), seven metros have hourly earnings growth above 5%.
- Both well above 5%, 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 the US population.
Industry Jobs Index
- Leisure and hospitality (106.60) remains well ahead of all other sectors, but reported its first decrease (-0.61%) 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 remained the weakest among sectors, but recorded its first increase (0.26%) 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, dry cleaners, and other businesses. The chart’s dark blue bars reflect the index level and the light blue diamonds reflect the 12-month change.
Industry Wage Report
- Leisure and hospitality leads all sectors with 10.40% hourly earnings growth, while trade, transportation, and utilities ranks second at 6.19%.
- Education and health services trails all sectors with 3.66 % hourly earnings growth.
- Construction leads sectors in 12-month weekly hours worked growth (-0.04%) and is the only sector with positive one-month annualized growth (0.29%).
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 by visiting the US Bureau of Labor Statistics.
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