Small business job growth remains above pre-pandemic levels
ROCHESTER, N.Y., May 2, 2023 /PRNewswire/ -- Small business hourly earnings growth over the past 12 months declined again in April to 4.52 percent according to the Paychex | IHS Markit Small Business Employment Watch. After increasing every month in 2023, the Small Business Jobs Index, which measures the change in national employment growth for businesses with less than 50 employees, declined slightly by 0.24 percent from March and now stands at 99.49 in April.
"While the jobs index dropped in April, we are still experiencing a rate of growth that is better than pre-pandemic levels," said James Diffley, chief regional economist, S&P Global Market Intelligence.
"Our April data shows wage growth is slowing, signaling that the Fed's efforts to pull back inflation are succeeding," said John Gibson, Paychex president and CEO. "Small business owners continue to successfully navigate a variety of macro issues including the cost of and access to capital, historically low labor participation rates, and the transition of the workforce to Generation Z."
Today, Paychex also released a new supplemental Small Business Employment Watch report, focused on the emerging role of Generation Z, the only generation in the workforce that is currently showing growth. Gen Z (born 1997-2012) recently surpassed Baby Boomers (born 1946-1964) as a percentage of the small business workforce. To learn more about the findings, read "The Rise of Generation Z: A Paychex Special Report."
In further detail, the April Employment Watch report showed:
- Representing the first slowdown in small business job growth of 2023, the national index decreased 0.24 percent in April.
- The rate of small business job growth slowed in all regions in April with the West slowing the most (0.30 percent) to 98.73.
- Weekly hours-worked growth was down 0.11 percent from a year ago, making April the first month with a negative result in 2023.
- The South led all regions in small business employment growth for the 13th consecutive month and remained the only region with an index above 100.
- North Carolina remained the top state for small business job growth; Florida was once again the top state for hourly earnings growth.
- Dallas continues to lead U.S. metros in small business job growth and hourly earnings growth.
- Texas, Florida, Wisconsin, and Tennessee all had hourly earnings growth above five percent, outpacing the national average of 4.52 percent.
- Hourly earnings growth in construction (5.32 percent) reached a record high in April, and the sector ranked first for hourly earnings, weekly earnings, and weekly hours-worked growth.
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 April, including interactive charts detailing all data, are available at www.paychex.com/watch. Highlights are available below.
National Jobs Index
- The national jobs index declined 0.24 percent in April (to 99.49), marking the slowest pace of small business job growth in 2023 to date.
- The national index was also down year-over-year, losing 1.63 percent since April 2022.
The national one-month change rate decreased for the third consecutive month, dropping from 0.18 percent to -0.24 percent between January and April.
National Wage Report
- Hourly earnings growth slowed to 4.52 percent, the lowest level since 2021.
- Weekly hours-worked growth saw its first negative result in 2023, dropping
0.11 percent year-over-year.
Regional Jobs Index
- At 100.53, the South led regions for the 13th consecutive month and was the only region with an index above 100.
- All regions slowed in April, with the West slowing the most (0.30 percent) to 98.73.
Regional Wage Report
- The South and West (both 4.69 percent) ranked first in hourly earnings growth among regions, with the Midwest (4.56 percent) and Northeast (4.54 percent) following close behind.
- Despite its strong hourly earnings performance, the West ranked last for weekly earnings growth (4.12 percent) due to a decrease in weekly hours-worked growth.
State Jobs Index
- North Carolina (101.95) remained the top state for small business job growth for the 10th consecutive month.
- The pace of small business job growth slowed in 15 of the top 20 states in April, with Illinois falling the furthest (0.98 percent).
- California had the weakest small business job growth rate among states (98.24) for the third consecutive month, falling 3.03 percent from April of last year.
Note: Analysis is provided for the 20 largest states based on U.S. population.
State Wage Report
- Texas (5.54 percent) remained first among states for hourly earnings growth for the second consecutive month, though Florida (5.26 percent), Wisconsin (5.09 percent), and Tennessee (5.00 percent) were all close behind.
- Virginia continued its nearly year-long run as the weakest performer for hourly earnings growth and was the only state below four percent.
- Georgia's weekly hours-worked growth decelerated in April, dropping 1.43 percent from the previous month.
Note: Analysis is provided for the 20 largest states based on U.S. population.
Metropolitan Jobs Index
- In addition to continuing its six-month streak with the strongest index, Houston (102.72) also had the strongest 12-month change rate (1.11 percent) among metros.
- Atlanta (0.28 percent) and Tampa (0.06 percent) were the only metros to see their job growth rates increase in April.
- San Diego and Riverside, CA, both struggled to grow small business employment rates in April, with both cities' indices sitting under 98 and declining nearly four percent year-over-year.
Note: Analysis is provided for the 20 largest metro areas based on U.S. population.
Metropolitan Wage Report
- Riverside, CA, performed strongly in April, showing one- and three-month annualized growth rates above seven percent and ranking first among metros for hourly earnings growth (5.41 percent).
- San Francisco (3.40 percent) had the weakest hourly earnings growth rate among metros for the second straight month.
- Despite the performances noted above, Riverside($29.39) had one of the lowest hourly earnings rates among metros, while San Francisco($39.36) had the highest.
- Baltimore had the strongest weekly hours-worked growth rate among metros (0.44 percent).
Note: Analysis is provided for the 20 largest metro areas based on U.S. population.
Industry Jobs Index
- Other services gained 0.25 percent in April (to 101.28), making it the top performing sector.
- Up 0.40 percent from last year, education and health services (100.84) was the only sector to increase its pace of small business job growth from last year.
- Though small business job growth remains strong in leisure and hospitality (100.58), the sector's growth rate dropped 0.73 percent in April and 4.41 percent from last year.
- Manufacturing was the weakest sector for small business job growth in April, with notably low numbers in the West contributing to its ranking.
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.
Industry Wage Report
- In addition to seeing its hourly earnings growth rate reach a record high in April (5.32 percent), construction ranked first for hourly earnings, weekly earnings, and weekly hours-worked growth.
- Education and health services (3.69 percent) was the only sector with hourly earnings growth below four percent.
- Leisure and hospitality ranked second among sectors for hourly earnings growth (5.22 percent). Weekly hours-worked growth in the sector quickly decelerated, with its 12-month growth rate declining 0.58 percent and its one-month annualized growth rate declining 5.70 percent.
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.
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.
About the Paychex | IHS Markit Small Business Employment Watch
The Paychex | IHS Markit Small Business Employment Watch is released each month by Paychex, Inc., a leading provider of payroll, human resource, insurance, and benefits outsourcing solutions for small-to medium-sized businesses, and S&P Global Market Intelligence, a Division of S&P Global (NYSE: SPGI), which merged with IHS Markit in 2022 and is a provider of information services and solutions to global markets. 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 tool delivers real-time insights into the small business trends driving the U.S. economy.
About Paychex
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.
About S&P Global Market Intelligence
At S&P Global Market Intelligence, we understand the importance of accurate, deep and insightful information. Our team of experts delivers unrivaled insights and leading data and technology solutions, partnering with customers to expand their perspective, operate with confidence, and make decisions with conviction.
S&P Global Market Intelligence is a division of S&P Global (NYSE: SPGI). S&P Global is the world's foremost provider of credit ratings, benchmarks, analytics and workflow solutions in the global capital, commodity and automotive markets. With every one of our offerings, we help many of the world's leading organizations navigate the economic landscape so they can plan for tomorrow, today. For more information, visit www.spglobal.com/marketintelligence.
Media Contacts
Chris Muller
Paychex, Inc.
+1 585-338-4346
cmuller@paychex.com
@Paychex
Kate Smith
S&P Global Market Intelligence
+1 781-301-9311
katherine.smith@spglobal.com
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SOURCE Paychex, Inc.
