Small business employees in the United States saw the 12th straight month of hourly earnings increases in May, but the pace of job growth slowed, according to payroll giant Paychex.
The Paychex | IHS Markit Small Business Employment Watch for May showed an average hourly wage of $30.31, up 5.19% from a year ago. The Small Business Jobs Index, which measures the year-over-year rate of employment growth, fell 0.27% from the previous month to 100.87.
The hourly wage has increased by $1.50 over the past year, now reaching $30.31. At 100.87, the national employment index saw the biggest one-month decline in more than two years.
“We continue to see very robust hourly and weekly wage growth across all sectors, particularly in the leisure and hospitality sector, reaching almost 9% on an annual basis,” said Frank Fiorille, Vice President risk, compliance and data management. analytics at Paychex. “However, we have seen a slight slowdown in the last quarter of the employment index, and this month it has picked up a bit, although it is still at very high levels. We are still seeing very high demand, but companies continue to struggle to find people to fill these positions. »
Even though companies have increased salaries and bonuses to attract employees, they still cannot hire enough workers. In response, some businesses have had to reduce the number of hours open to the public.
The South continued to be the top region for small business job growth, with Texas again being the top state and Dallas remaining the top metropolitan area.
The South was also the top region in terms of hourly earnings growth, with North Carolina being the top state. Tampa led metro areas in weekly earnings growth at 6.02% and was second only to Dallas in hourly earnings growth (6.19%).
“There are two different stories in Florida, where you see Miami is pretty strong, but Tampa is trailing and at the bottom of our index,” Fiorille said. “They’ve been very strong for a while and now there’s a high bar to hit.”
Leisure and hospitality led the various industry sectors in both small business employment growth and hourly earnings growth. However, there was a slowdown in this sector also in May. “Even though it’s the fastest-growing and best-performing index overall, growth there has definitely slowed this quarter,” Fiorille said.
Accountants should keep their small business clients informed about how the Internal Revenue Service is dealing with its backlog of unprocessed tax returns, especially those filed on paper. “You see more buzz around them requiring some electronic filing and less paperwork to help with their backlog,” Fiorille said. “Even though these backlogs are still quite large, they are solving them. Whether companies are waiting for their employee retention tax credit or individuals are waiting for their refunds, it looks like the backlog is improving.