Small Business Job Growth Continues

February 1, 2022

2:15 PM

The numbers are in—and they continue to look good for small business owners. According to the ”Paychex | IHS Markit Small Business Employment Watch,” national small business job growth and employee earnings continued to increase in January.

The January data shows the Small Business Jobs Index, which measures the year-over-year rate of employment growth, gained 0.39% in January. At 101.33, the national index has increased 7.80% over the past year, surpassing its 2014 peak. At 4.43% year-over-year, hourly earnings growth maintained its record high set last month (December 2021).

“The pace of small business job growth continued to grow in January, reaching a new record high powered by the return to work in leisure and hospitality,” says James Diffley, chief regional economist at IHS Markit.

Paychex CEO Martin Mucci, Paychex says today’s small businesses are continuing to recover from the job losses experienced at the start of the pandemic. “While employment has not returned to pre-pandemic levels, the sustained growth in jobs is certainly positive. Workers are also continuing to command higher pay. Hourly earnings growth in January matched the peak level set just last month.”

In further detail, the January report showed:

The national index gained 0.39% in January, in line with its average monthly gain in the last six months of 2021.
At 4.43% year-over-year, hourly earnings growth continued to show strength, remaining at its peak level hit in December 2021.
Hiring in leisure and hospitality (107.25) accelerated further ahead of other sectors, gaining 1.49% in January and 23.94 percent since last January.
Likely due to the omicron variant, one-month annualized weekly hours worked growth dropped nearly 8% in leisure and hospitality in January.
Job gains were broad-based as all regions of the US advanced in January, though the West leads all regions at 101.65, improving for the eleventh consecutive month.
Texas remained the top state for small business hiring and Dallas the top metro.

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

January 2022 Paychex | IHS Markit Small Business Employment Watch

National Jobs Index

At 101.33, the national index surpassed its 2014 peak.
The national index gained 0.39% in January, in line with its average monthly gain in the last six months of 2021.
The small business jobs index continues to improve, though total employment is still well below pre-pandemic levels.

National Wage Report

Up 4.43% year-over-year, hourly earnings growth remained at its peak level in January.
Weekly earnings moderated slightly to 3.87% in January from 3.94% to end 2021.
Annual weekly hours worked growth was essentially flat from December to January (-0.29%), though one-month annualized growth has been positive for the past four months.

Regional Jobs Index

The gains were broad-based as all regions advanced in January.
The West leads all regions at 101.65, improving for the eleventh consecutive month.
At 101.43, the Northeast leads one-month, three-month, and 12-month changes rates among regions.

Note: Percentages displayed in the regional heat map reflect 12-month changes.

Regional Wage Report

At 4.55%, hourly earnings growth remains strongest in the West region for the seventh consecutive month.
The Northeast is the only region with hourly earnings growth below 4%. While all other regions have one-month annualized growth above four percent, growth in the Northeast is just 2.44%.
All regions have fewer weekly hours worked year-over-year.

Note: Percentages displayed in the regional heat map reflect 12-month changes.

State Jobs Index

Texas, Arizona, North Carolina, Georgia, and Washington lead, all with index levels greater than 102.
At 101.51 and up 10.51% from last year, New York improved its ranking among states for the fifth consecutive month.
Tennessee and Missouri had the strongest one-month gains in January (1.15%), although both states have an index below 100.

Note: Analysis is provided for the 20 largest states based on US population. The chart’s dark blue bars reflect the index level and the light blue diamonds reflect the 12-month change.

State Wage Report

Four states registered hourly earnings growth above five percent, North Carolina, Tennessee, Ohio, Florida, and Georgia.
Missouri (2.92%) is the only state with hourly earnings growth below 3%.
Texas, Pennsylvania, and Arizona are the only three states with positive weekly hours worked growth year-over-year.

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

Metropolitan Jobs Index

Dallas (104.30) and Minneapolis (103.56) lead all metros by a wide margin and were relatively unchanged in January.
Denver gained 2.64% in January, increasing its index to 99.81. However, Denver and Baltimore remain the only metros with index levels below 100.
Following four consecutive slowdowns to end 2021, Tampa gained 1.09% in January, its second best one-month gain since 2017.

Note: Analysis is provided for the 20 largest metro areas based on the US population. The chart’s dark blue bars reflect the index level and the light blue diamonds reflect the 12-month change.

Metropolitan Wage Report

Denver, Tampa, Miami, and Phoenix lead metros in hourly earnings growth, all above 5%. All metros have hourly earnings growth at or above 3% in January.
Houston ranks last among metros in hourly earnings growth (3%), but first among metros in weekly hours worked growth (0.71%).
San Francisco, Detroit, and Seattle all have weekly earnings growth below 3%, largely due to a decrease in weekly hours worked.

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

Industry Jobs Index

Leisure and hospitality (107.25) accelerated further ahead of other sectors, gaining 1.49% in January and 23.94% since last January.
The national index reported a new record high in January (101.33), though only leisure and hospitality, other services, and manufacturing have index levels above 100.
Construction remains relatively flat and among the lowest sectors for jobs growth, trending below 99 for the ninth consecutive month.

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 hourly earnings growth of 10.95%, nearly double the next highest ranked sector, trade, transportation, and utilities (5.81%).
Likely due to the omicron variant, one-month annualized weekly hours worked growth dropped nearly eight percent in leisure and hospitality in January. For reference, education and health services (-0.31%) is the only other sector with negative one-month annualized weekly hours worked growth in January.
At 3.10%, education and health services rank last among sectors in hourly earnings growth.

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.}