Weekly Hours Worked Up Among Small Businesses

While the Paychex | IHS Markit Small Business Employment Watch for August shows a continued decrease in the rates of small business jobs and wage growth, it also reveals that weekly hours worked are on the rise. Down 0.12 percent in August to 99.22, the Small Business Jobs Index has fallen for three consecutive months and is 0.73 percent lower than a year ago. The rate of hourly earnings growth in August stands at 2.21 percent. Despite the hiring slowdown, the number of weekly hours worked has been increasing for the past 21 months (up 0.52 percent YOY), helping weekly earnings growth (up 2.74 percent YOY).

“Small businesses continue to reduce hiring in this tight workforce competition. At 99.22, August marked the sixth decline of 2018, bringing the Small Business Jobs Index to its lowest level since 2010,” said James Diffley, chief regional economist at IHS Markit.

“As the rate of job growth continues to slow at small businesses, existing employees are making up for the lack of new hires by working more hours each week, helping to bolster weekly earnings growth,” said Martin Mucci, Paychex president and CEO.

Broken down further by geography and industry, the report showed:

The top regions for employment growth and wage growth, respectively, are the South and West.
Wisconsin ranks highest among states for jobs growth; Arizona ranks first in wage growth.
Denver ranks first among metros in jobs growth; Riverside, CA, took the lead in wage growth.
Among industries, Leisure and Hospitality ranks first in wage growth.

August Paychex | IHS Markit Small Business Employment Watch

National Jobs Index

Small business job growth has steadily declined; the national index is down 0.73 percent year-over-year, compounding a similar decline of 0.74 percent in the prior year.
Slowing for the third consecutive month, the national index is down 0.38 percent during the past three months.

National Wage Report

Weekly hours worked continue to increase and have been accelerating since March. Possibly associated with the slowdown in small business job growth, current employees are working more hours as the year-over-year growth rate has been positive for the past 21 months.
Earnings growth rates have decelerated for a full year now, with the hourly earnings rate now at 2.21 percent. One-month and three-month annualized growth rates are both below two percent in August.

Regional Jobs Index

Despite the weakest 12-month growth rate, the South remains the top-ranked region for small business job growth for the 28th consecutive month, with an index level of 99.80.
While all other regions declined, the West remained flat at 99.32.

Regional Wage Report

At $27.97 and up 3.03 percent year-over-year, hourly earnings are highest and growing the fastest in the West, a full percentage point faster than the other regions.
With positive hours worked growth in all regions, weekly earnings growth is well above hourly earnings growth.

State Jobs Index

Wisconsin, Arizona, and Georgia lead the states in small business job growth in August.
Seven states, including New York, Illinois, Ohio, and California have an index level below 99.

State Wage Report

Arizona and Tennessee have weekly earnings growth greater than four percent in August.
Eleven states have hourly earnings growth below two percent in August.
Trailing other states, Virginia reports less than one percent growth in both hourly and weekly earnings in August.
Growth in hours worked is positive in all but one state, Washington.

Metroploitan Jobs Index

Following four months of consecutive slowdowns, Denver regained the top spot among metros, gaining 0.46 percent in August and reaching an index of 101.21.
At 97.80, Los Angeles remains the lowest-ranked metro for the seventh straight month, maintaining a negative year-over-year growth rate in every month since the start of 2017.

Metropolitan Wage Report

Southwestern metros Riverside and Phoenix are well ahead in hourly earnings growth. At 4.48 percent in August, Riverside overtook Phoenix for the top-ranked metro with its fourth straight increase.
Just above one percent in August, hourly earnings growth has slowed considerably in Houston, though weekly earnings growth is near two percent as employees are working more hours compared to last year.

Industry Jobs Index

Increasing slightly at 0.04 percent, Professional and Business Services is the only industry sector to improve the pace of job growth from August 2017.
Five of the eight reported industry sectors have an index level below 99.
Construction improved slightly in August, remaining just above 100.

Industry Wage Report

Note: Analysis is provided for seven major industry sectors.

More Information

For more information about the Paychex | IHS Markit Small Business Employment Watch, visit the website 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.

Payroll