Small business employees are seeing fatter weekly paychecks, with an increase of 4.1 percent year-end, a nine-year high, CNBC reported on Wednesday, Jan. 1.
Earnings growth was the biggest recorded since the Paychex/IHS Markit Small Business Employment Watch report launched in 2011. Earnings growth was driven in part by regular increases in hourly pay along with December’s 1 percent surge in hours worked, the biggest since 2012.
The monthly small business report taps the payroll data of roughly 350,000 Paychex clients to track wage trends and other activity.
Job growth increased by 0.06 percent from November, while year-over-year dropped 0.7 percent.
“Small business job gains have flattened in the second half of the year as labor markets prove very tight,” said James Diffley, chief regional economist at IHS Markit. “In response, weekly earnings have accelerated, surging from 2.49 percent mid-year to 4.13 percent at year-end.”
The national jobs index hit 98.16 in December, up 0.6 percent.
Wage growth has been on the rise since the 2008 financial crisis, sometimes slow but mostly steady. It picked up further in late 2018 and 2019.
New York and California led the report for earnings growth, with hourly increases topping 4 percent and weekly earnings exceeding 5 percent. The South and Midwest had the slowest hourly and weekly earnings growth. The Southern region led small business growth.
Tennessee ranked first for job growth, up 2.1 percent year over year. Ohio ranked seventh and Michigan 10th, both up over 0.4 percent.
The leisure and hospitality sector saw the largest increases in hourly and weekly earnings — 5 percent — and hours worked. The only industry with lower than 2 percent earnings growth is education and health services.
The July jobs report from the Bureau of Labor Statistics showed a 224,000 addition in non-farm payrolls for June, beating expectations of 160,000 added jobs for the month. Labor force participation and average hourly earnings both increased, with the professional and business services, healthcare, transportation and warehousing industries seeing the greatest job gains for June.