- While job growth slowed slightly for small business in June, wages continued to be on the rise, a new report from Paychex/IHS Markit Small Business Employment Watch reveals. Year-over-year statistics for June showed just over a 1% decline in job growth. But for the third month in a row, wages rose, averaging $27.21 per hour — a jump of 2.65% year over year. The data suggests the tight market is beginning to push wage gains as business tries to attract and retain talent, Paychex said in the release.
- Hourly earnings growth, which includes data from the last three months in a row, is the strongest since 2017, Paychex said. However, hours worked declined, facing negative growth for the last three quarters, reducing weekly earnings by 2.02% — a 4-year low.
- Texas led the nation for small business growth, according to the report, while Illinois held onto its lead for wage growth. Southern states led in overall employment growth, while western states lead in growth in hourly earnings. The slowest job growth in June was in the leisure and hospitality areas, at 0.85%.
Despite continued job growth, many analysts have curiously examined why the wage market seems to have stalled in comparison. While small to medium sized businesses have been faster to adjust wages to market conditions, many speculate that the uncertainty of the business climate may be holding larger employers back from making similar changes. However, many employers are realizing they may need to take another look at their compensation practices; 45% of respondents in a SunTrust survey said that they have raised pay rates to compete in the tight labor market.
Job growth continues apace, despite increased speculation that it may soon slow, according to recent Bureau of Labor Statistics data. However, some industries, including IT, are seeing job growth that is many times greater than other industries, putting further pressure on the industry to cultivate and find talent. As businesses struggle to adjust to a smaller applicant pool, they may be looking for alternatives to increased head count, including hiring more contingent workers to make up for the gaps. Others are considering apprenticeships and other development programs in order to build a pipeline of talent.
A PwC report anticipated that job growth would slow this year in response to labor market conditions and wages would begin to increase. But analyses of state wage-growth and unemployment by the Federal Reserve Bank of San Francisco noted that sharp increases in wage growth may not happen despite the tight market — but it did note that measuring national labor markets is notably different than assessing local markets.