Wage Growth for U.S. Small Business Employees Remains Consistent in July, While Job Growth Continues to Moderate

July 30, 2024 at 08:30 AM EDT

According to the Paychex Small Business Employment Watch, hourly earnings growth for U.S. workers in businesses with fewer than 50 employees has held steady since May, reporting 3.16% growth in July, and weekly earnings growth remains below three percent for the sixth consecutive month. The Small Business Jobs Index has reported moderate gains on average through the first seven months of 2024.

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The Paychex Small Business Employment Watch shows 3.16% hourly earnings growth in July as job growth continues to moderate. (Graphic: Business Wire)

“Overall, small businesses are looking to hire but continue to face a tight labor market,” says John Gibson, Paychex president and CEO. “Inflationary pressures and an evolving regulatory environment are making it difficult for these organizations to compete for scarce qualified employees. While job growth has moderated compared to last year, small businesses continue to be resilient and are finding ways to navigate the changing economic environment.”

“Hiring dynamics by region, state, and industry are diverging, with the strongest job growth happening in the Midwest and a notable slowdown in Construction hiring across the country,” Gibson adds. “Small businesses are also continuing to carefully manage hours worked, which remains negative year-over-year for the 16th-straight month.”

Jobs Index and Wage Data Highlights:

The national small business jobs index has averaged moderate employment gains (100.44) through seven months of 2024. The July reading stands at 99.87.
The majority of states are reporting an index level above 100 in July, but others are driving the national index to trend down.
- The top four states for small business employment growth in July are all located in the Midwest region (Indiana, Michigan, Missouri, and Ohio).
- Employment growth in California dropped again in July to 98.74 indicating more significant year-over-year job losses.
At 2.87%, weekly earnings growth has trended just below three percent for the past six months. Weekly hours worked growth (-0.20%) remains negative year-over-year for the 16th consecutive month.
The Construction sector has the largest one-month change among industries, down 0.67 percentage points to an index level of 99.77 in July, yet it continues to lead growth among sectors in hourly earnings (3.84%), weekly earnings (3.79%), and weekly hours worked (0.16%) for the ninth consecutive month.
Education and Health Services (102.04) remains the top industry for small business employment growth in July yet reports the weakest hourly earnings growth at 2.67%.

The complete Small Business Employment Watch results for July 2024, including interactive charts detailing the data at a national, regional, state, metro, and industry sector level are available at www.paychex.com/watch. Learn more and sign up to receive monthly Employment Watch alerts.

About the Paychex Small Business Employment Watch

The Paychex Small Business Employment Watch is released each month by Paychex, Inc. Focused exclusively on businesses with fewer than 50 workers, the monthly report offers analysis of national employment and wage trends and examines regional, state, metro, and industry sector activity. Drawing from the payroll data of approximately 350,000 Paychex clients, this powerful industry benchmark delivers real-time insights into the small business trends driving the U.S. economy. The jobs index is scaled to 100, which represents no year-over-year change in job growth among same store businesses. Index values above 100 represent new jobs being added, while values below 100 represent jobs being lost.

About Paychex

Paychex, Inc. (Nasdaq: PAYX) is an industry-leading HCM company delivering a full suite of technology and advisory services in human resources, employee benefit solutions, insurance, and payroll. The company serves over 745,000 customers in the U.S. and Europe and pays one out of every 12 American private sector employees. The more than 16,000 people at Paychex are committed to helping businesses succeed and building thriving communities where they work and live. Visit paychex.com to learn more.