Small business employment grew by only 0.2 percent in July, less than it grew in June, but wages and hours worked by employees increased at a much faster pace, a new survey finds.
Wages increased by 0.7 percent and hours worked increased by 0.9 percent, according to the Intuit Small Business Index, which draws from 62,000 small businesses that use the company's accounting software (thus not all small businesses are represented).
The employment increase translates to a 2.4 percent annual increase and means there were 40,000 new jobs created nationwide among small businesses in July, a decrease from June’s revised estimate of 45,000 new jobs. Since the growth trend began in October 2009, small business jobs have increased by 330,000. [See Charts Below]
The index’s geographical measurement also revealed that small business employment is slightly up across most of the country. Although the pace of job growth slowed in July.
“While employment is up this month, it is, like last month, up less than the month before,” said economist Susan Woodward. “Both compensation and hours worked are dramatically up, while employment is slightly up across most of the country. These latter signs indicate a continued general recovery despite slowing growth in employment.”
The wage increases were particularly meaningful, Woodward said today.
“This is a big increase for compensation which, on an annual basis, would be nearly 10 percent per year,” Woodward said. “With inflation running so low, this is a substantial increase in real compensation. The increase in hours worked is also large –more than 10 percent if carried out over an entire year. It appears that small businesses are busy, and need additional help, but are asking their existing people to work more hours rather than hiring more people.”
The report also breaks down employment by divisions and states across the country. Mountain states saw the largest increase by percentage, followed by the South Atlantic and Pacific Coast. For the states in which the report had more than 1,000 small firms represented, Maryland saw the greatest growth while New Jersey is the only state that saw a slight decrease in employment.