Hourly Earnings Growth Falls Below Three Percent as Job Growth Remains Steady for U.S. Small Businesses

The Paychex Small Business Employment Watch for August, which reflects U.S. small businesses with fewer than 50 employees, reported hourly earnings growth for workers dropped to 2.89%. This marks the first time growth has been under three percent since January 2021. In addition, the one-month annualized hourly earnings growth dropped to 1.91%. The national small business jobs index has averaged 100.37 through eight months of 2024, representing modest employment growth.

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According to the August Paychex Small Business Employment Watch, national hourly earnings growth is below three percent for the first time since January 2021. (Graphic: Business Wire)

“Our monthly jobs and wage reporting is based on actual payroll data and provides a near real-time pulse on the status of the small business labor market, which can be a leading indicator of the state of the overall U.S. workforce,” said John Gibson, Paychex president and CEO. “Our data has shown moderate changes in employment growth over the eight months in 2024, even though the jobs indexes in July and August were below 100. This supports broader trends of a cooling labor market and the Fed’s widely reported intention to begin lowering interest rates soon.”

“After holding steady for several months, hourly earnings growth continued to decelerate in August,” Gibson added. “Falling below three percent for the first time in three years is another notable signal that the labor market is moving closer to its pre-pandemic level.”

Jobs Index and Wage Data Highlights

• At 99.89 in August, the national jobs index increased 0.02 percentage points from July but remained slightly below 100, indicating nominal year-over-year job losses.
• National weekly hours worked growth (-0.08%) remained negative year-over-year for the 17th consecutive month, though one-month annualized growth was positive for the first time since January.
• The Midwest (100.50) remained the top region for small business employment growth for the third consecutive month. Leading the region and nation, Indiana (101.87) was the top state for small business employment growth again in August and is the only state with a positive 12-month change rate (0.26 percentage points).
• Education and Health Services (101.87) continued as the top industry sector for national job growth for the third consecutive month.
• Ranked first among regions for the 15th-straight month, the West (3.55%) was the only region to report hourly earnings growth above three percent in August.
• For the 10th consecutive month, Construction led growth among industries in hourly earnings (3.66%), weekly earnings (3.81%), and weekly hours worked (0.27%).

The complete Small Business Employment Watch results for August 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.

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