Weekly Hours Worked Increase as Small Business Hiring Challenges Persist

The Paychex | IHS Markit Small Business Employment Watch shows job growth declined again in August while wage growth stabilized. At 98.01, the national jobs index fell 0.17 percent from last month and 0.76 percent over the past quarter, contributing to a 1.22 percent year-over-year drop in the rate of small business job growth. Hourly earnings growth settled at 2.61 percent ($0.69) in August, and weekly hours worked showed positive growth for the first time in 2019.

“The jobs index has fallen since early 2017. In 2019, we’ve seen a continuation of that slowdown,” said James Diffley, chief regional economist at IHS Markit.

“Small businesses are adapting to the challenges of the tight labor market by increasing hours and earnings,” said Martin Mucci, Paychex president and CEO. “In August, we saw an increase in weekly hours worked, as well as higher hourly earnings growth compared to this time last year.”

Broken down further, the August report showed:

Segmenting hourly earnings growth results by employee type shows employees at 2.75 percent, while owners are much lower at 0.86 percent.
The South remains first among regions in employment growth; the West leads regions in hourly earnings growth.
Dallas is again the top metro for job growth; San Diego maintains its lead among metros in wage growth.
Stable at 4.54 percent in August, Leisure and Hospitality leads industries in hourly earnings growth.

The complete results for August, 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.

August Paychex | IHS Markit Small Business Employment Watch

National Jobs Index

The national index slowed 0.17 percent in August and 0.76 percent during the past quarter, as the deceleration of small business job growth increased during the summer of 2019.
At 98.01, the national index is down 1.22 percent year-over-year.

National Wage Report

Hourly earnings growth leveled off this summer, settling at 2.61 percent in August.
When examining hourly earnings growth for hourly and salaried employees, growth for hourly employees stands at 3.55 percent, while growth for salaried employees lags at 1.92 percent.
Weekly hours worked growth turned positive in August for the first time in 2019.

Regional Jobs Index

Small business job growth declined in all regions for the third consecutive month.
The South is below 99, but remains the top region for small business employment growth in August.
Slowing 0.15 percent in August and 1.29 percent from last year, at 97.39, the Northeast continues to be the lowest ranked region.

Regional Wage Report

Hourly earnings growth continues to be fastest in the West, which is the only region above three percent.
The pace of weekly earnings growth in the Northeast has increased every month in 2019, climbing to 2.74 percent in August.

State Jobs Index

With indexes above 100, small business employment growth is strong in Tennessee, Texas, and Arizona.
At 101.02, Tennessee is the new top state for small business employment growth with the best one-month and 12-month growth rates.
Slowing 2.46 percent during the past quarter, Missouri fell below 97, joining New Jersey at the bottom of the state rankings.

State Wage Report

Illinois, New York, and Missouri lead hourly earnings growth with consistent gains throughout 2019.
At 3.53 percent, New York ranks second among states for hourly earnings growth.
Indiana again ranks last among states in growth for both hourly earnings and weekly hours worked, though both trended positively during the past six months.

Metropolitan Jobs Index

Dallas (101.28) and Phoenix (100.49) lead metro job growth by a wide margin.
At 95.64, Riverside ranked last among metros in small business job growth for the past six months.

Metropolitan Wage Report

San Diego leads metros in hourly earnings growth for the sixth consecutive month, averaging over four percent so far in 2019.
Hourly earnings growth in Chicago ranks second among metros at 4.10 percent.
At 1.22 percent and 1.24 percent respectively, hourly earnings growth in Houston and Tampa trails among metros.

Industry Jobs Index

The tight labor market is having a widespread effect on small business employment growth as all sectors fell modestly in August.
Below 98 and down 1.33 percent during the past quarter, Leisure and Hospitality is now ranked ahead of only Trade, Transportation, and Utilities, and Manufacturing.

Industry Wage Report

Stable at 4.54 percent in August, Leisure and Hospitality leads industries in hourly earnings growth. Weekly hours worked are negative year-over-year, but improved during the past quarter.
Slightly above one percent, Education and Health Services has the lowest wage growth among sectors, though it has been stable in recent months.

Note: Analysis is provided for seven major industry sectors.

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