Trends in Job Growth and Wages in America’s Small Businesses
February 10, 2022
by Steve Boese
I am an admitted Labor Market data geek. Probably my two favorite “work” days of the month are “Jobs” Friday, when the Bureau of Labor Statistics releases the Employment Situation report, and the day of the monthly JOLTS (Job Openings and Labor Turnover Summary) Report release. From the Jobs report we get the headline Jobs gained or lost number, the unemployment rate, the Labor Force Participation Rate and more. And JOLTS gives us total number of job openings, quits, layoffs and discharges, and more. These two monthly reports (and the deeper data broken down by job category), are both essential reading for everyone interested in trends in job growth, talent, people, and business. I encourage everyone to dig into both of these reports each month for trends in job growth.
Resources for HR and Payroll Leaders
But while valuable, these BLS publications are not the only, nor the most complete, resources for understanding labor market data. This is true particularly for HR and business leaders in America’s small businesses with fewer than 50 employees. This slice of the US economy is crucially important because businesses with fewer than 50 employees make up nearly 95 percent of firms in the U.S. Often, the HR and Payroll “departments”, if you could even call them that, in these small firms are stretched really thin. They typically have a solo HR professional responsible for all people processes and practices. Hiring, onboarding, payroll, compensation, benefits, training, compliance all fall to this leader. These HR pros can use every data source and resource on jobs, hiring, wages and more that they can get. Oh, and these resources need to be easy to find and free!
The need for resources for small business, to help them in their people-related decision making, is why I am highlighting the Paychex | IHS Markit Small Business Employment Watch. These free, monthly reports, examine and analyze year-over-year worker count changes in America’s small businesses. Trending results reveal movement in small business employment. An upward trend represents a strengthening job market while a downward trend is a sign of slowdown. Analyzing same-store worker count changes and anonymized wage data, sourced from real payroll data, from approximately 350,000 small businesses clearly indicates trends in jobs growth.
Small Business Trends in Q1 of 2022
And it is probably no surprise, given all the news from the BLS and from just about every local community, that the most recent release of the Small Business Employment Watch showed both strong job growth in small businesses. In addition, there are continued wage gains as employers of all kinds, and in all regions of the US, have needed to raise employee wages to try and fill open jobs and to retain existing employees. Specifically, the January 2022 data showed the Small Business Jobs Index, which measures the year-over-year rate of employment growth, gained 0.39 percent in January.
Now at 101.33, the national index has increased 7.80 percent over the past year, surpassing its 2014 peak. Additionally, at 4.43 percent year-over-year, hourly earnings growth maintained its record high set just one month ago (December 2021). The “real” payroll data from Paychex hundreds of thousands of small business customers shows how the tight labor market is impacting small businesses and their employees across the US.
The Employment Watch breaks down both the jobs and wages data sets by region, state, major metropolitan area, and by industry. In addition, it provides the top line national employment index and wage change data. These data slices can prove HR and business leaders with valuable and contextual insights as to how labor market trends are and should influence talent and people decisions. You can see all those details at the Small Business Employment Watch home page.
Make Trends in Job Growth a Monthly Habit
I recommend spending a little time each month reviewing the Small Business Employment Watch data for trends in job growth. It is an important and informative resource to help aid your talent and people decision-making and workforce planning. Many thanks to our friends at Paychex for making this data available, and for free, as a resource to the entire HR community.
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