2019 Starts with Slight Increase in Small Business Hiring and Wage Growth

The Paychex | IHS Markit Small Business Employment Watch started the new year with slight gains in small business job and hourly earnings growth. The Small Business Jobs Index increased 0.04 percent in January to 98.92, though it remains down 0.96 year-over-year. At 2.49 percent ($0.65) in January, hourly earnings growth has improved each month since August with wages now standing at $26.88. Weekly earnings growth, however, has slipped below two percent as weekly hours worked have declined.

“With a 0.04 percent increase in January, the recent losses seen in small business job growth abated to begin the new year,” said James Diffley, chief regional economist at IHS Markit.

“The uncertainty caused by the government shutdown doesn’t appear to have had a major negative impact on small business hiring, which increased for the first time since May 2018,” said Martin Mucci, Paychex president and CEO. “The job gain is certainly welcome news, but it remains a challenging hiring environment for small businesses given the low unemployment levels.”

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

The top region for both employment and wage growth is the West.
Wisconsin is the strongest state for small business job growth; California took over as the top state for wage growth.
Dallas remains first among metros in job growth; Riverside, California is once again the top metro for wage growth.
With a 0.14 percent increase in January, Construction is back above 100 and ranks second among industries in jobs growth.

The complete results for December, including interactive charts detailing all data at a national, regional, state, metro, and industry level, are available at www.paychex.com/employment-watch/. Highlights are available below.

January Paychex | IHS Markit Small Business Employment Watch

National Jobs Index

At 98.92, the steady decline in the jobs index halted this month, as January saw a slight increase (0.04 percent).
The national index remained below 99 in January and is down 0.96 percent year-over-year.

National Wage Report

At 2.49 percent in January, hourly earnings growth has improved each month since August. However, growth is lower than the January 2018 rate of 2.76 percent.
With a reduction in weekly hours worked, weekly earnings growth has declined below two percent.

Regional Jobs Index

Dipping below 98 in January, the Northeast fell 1.72 percent during the past year, further increasing the gap with the rest of the country.
The West began 2019 with the best one-month growth rate among regions, 0.18 percent, taking over the top spot at 99.49.

Regional Wage Report

Though negative across all regions in January, the recent downtrend in weekly hours worked growth is stabilizing.
At 3.28 percent, the West remains by far the strongest region for hourly earnings growth, though a decrease in weekly hours worked has pulled weekly earnings growth below three percent.

State Jobs Index

At 100.41, Wisconsin remains the top state for small business employment growth for the third consecutive month.
With an index below 97, small business employment growth in New Jersey has slowed considerably, down 2.50 percent in the last three months.

State Wage Report

After 23 months as the leading state for hourly earnings growth, Arizona slipped to second as California now ranks first among states, up 3.44 percent.
Indiana ranks last among states in both earnings and hours worked growth.

Metroploitan Jobs Index

Dallas ranks first among metros for the third consecutive month, surging to 102.94 in January.
The New York metro had a significant decrease in January, joining Northeast metros Philadelphia and Boston with an index below 98.

Metropolitan Wage Report

Riverside, Phoenix, and Denver are the metro pace setters for hourly earnings growth, with California metros Los Angeles and San Diego rounding out the top five.
Though very low at 1.21 percent, Houston’s hourly earnings growth trend has turned upwards after a long decline.

Industry Jobs Index

With a 0.14 percent increase in January, Construction is back above 100 and ranks second among industries.
Finance fell below 98 in January, joining Manufacturing at the bottom of the industry rankings.

Industry Wage Report

At $16.96/hour, Leisure and Hospitality is the lowest wage sector, but has the fastest growth, 4.10 percent.
Consistently among the weakest sectors for hourly earnings growth, Education and Health Services has been below two percent for the past six months.

Note: Analysis is provided for seven major industry sectors.

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