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Wage and Hiring Figures for Small Businesses Remained Flat in May

image for Monkey Business Images / Shutterstock
Monkey Business Images / Shutterstock
  • As the job index remains the same from last month, wage growth continues to stay ahead of the 2018 rate.
  • Southern states still lead employment growth, but states in the West lead hourly earnings growth.
  • Despite being the lowest-performing industry in terms of job growth, manufacturing is the only one to see weekly earnings grow more than 4%.

In May, wage and job growth for U.S. small businesses remained largely unchanged from April, though hourly earnings have increased by nearly 70 cents year to year, according to the latest Paychex | IHS Markit Small Business Employment Watch.

Released each month by Paychex and IHS Markit, the Small Business Employment Watch examines employment and wage trends throughout the country. The report, drawn from payroll data collected from Paychex's roughly 350,000 clients, gives insights into economic trends at the national, regional and local levels.

According to the monthly report, the national job index was at 98.76 throughout the month of May. That figure continues a relatively stable trend throughout 2019.

Martin Mucci, Paychex president and CEO, said the flat job growth figure could be some cause of concern for small business owners, though there are steps they can take.

"Flat job growth this year suggests that small businesses are struggling to compete with larger companies for talent," Mucci said. "According to our most recent research report, one way that employers can stand out to prospective hires is by focusing on employees' desire for flexibility in when, where, and how they work."

As the American economy remains a story of continued growth under the Trump administration, the Small Business Employment Watch shows that the national job index has plateaued for most of 2019. The May figure of 98.76 is down 0.85 points from May 2018 but is consistent with the last two months.

Hourly wages throughout the country are up 2.53% from last year, remaining only slightly ahead of the 2018 average of 2.49%. Similarly, weekly earnings growth for small business employees continues to hover just over 2%. As the minimum wage increased, employers responded with decreases in the number of weekly hours worked, officials said.

At the state level, Tennessee, Texas, Georgia and Arizona all have job indexes above the 100 mark, with Tennessee earning the top spot. These states also continue their 12-month positive job growth rates. Meanwhile, New York and New Jersey again find themselves at the bottom of the list for small business job growth.

Illinois posted the highest hourly earnings growth in May, sporting a 3.51% increase. Officials said that jump is the state's fastest spike in growth since the report started back in 2011. With the average hourly rate in Illinois sitting at $29.62, only Washington, Massachusetts and Virginia can boast higher rates.

When considering regions, the May report shows that the South is the only area to report a job index above 99. Officials said the Southern states continue to dominate in this metric, having topped the small business employment growth chart for 36 of the past 37 months.

May also marked the first time this year that the Northeastern U.S. has had its small business employment growth metric rise above 98. The region was also able to report its first consecutive increase for the first time in more than a year, according to officials.

As for wages, the Western U.S. leads in hourly earnings growth with an average rate of $28.65 per hour and year-over-year growth at 3.11%. However, the West is also the only region to see a month-to-month slowdown in its hourly earnings numbers.

For metropolitan areas, May was very kind to the Dallas metro area, which saw a job index of 103.65. With that figure, representing a 3.4% increase over last year, Dallas leads other metropolitan areas "by a wide margin," officials said. Other areas reporting strong growth were Tampa Bay, Atlanta, Denver, Phoenix and Seattle, which all exceeded 100.

On the other side of the scale, in California, Riverside and San Diego joined New York City as some of the lowest-ranking metro areas in terms of their job indexes.

For wages at the metropolitan level, Chicago, San Diego, Los Angeles and Riverside reported the strongest hourly earnings growth, while Houston and Dallas reported growth below 2% year to year.

The monthly report also examined growth within various American industries. The job index showed that manufacturing jobs became the lowest-performing sector in May at 96.92, marking a 2.19% drop from last year.

Education and health services, however, saw their fifth consecutive gain, rising 0.05% in May and surpassing construction as the second highest-ranking industry.

Leisure and hospitality jobs saw a surge in hourly earnings, with a 4.59% increase last month, though officials said those increases are "being minimalized by a significant decrease in weekly hours worked," which were down 1.7%. Only manufacturing posted a weekly earnings growth above 4%.

Andrew Martins

Andrew Martins is an award-winning journalist with a Bachelor of Arts in journalism from Ramapo College of New Jersey. Before joining business.com and Business News Daily, he wrote for a regional publication and served as the managing editor for six weekly papers that spanned four counties. Currently, he is responsible for reviewing tax software and online fax services. He is a New Jersey native and a first-generation Portuguese American, and he has a penchant for the nerdy.