B2B Payments

Tight Job Market Continues SMB Squeeze: Paychex

Tight Job Market Continues SMB Squeeze

Small businesses continue to struggle amid a tight labor market in the U.S., according to payroll and human resource management solution provider Paychex.

The company released its Paychex | IGH Markit Small Business Employment Watch report this week, finding that while average small business wages rose for hourly workers, hiring remained flat through the month of February.

The month saw a $0.66 increase in average hourly wages at small businesses, the company found, but according to IHS Markit Chief Regional Economist James Diffley, the key takeaway is the pressure that a difficult jobs market puts on the small business community.

“Small business job growth remains weak in this very low unemployment economy,” he said.

“Businesses continue to face challenging hiring conditions due to the tight labor market,” said Paychex President and CEO Martin Mucci in another statement. “Our latest survey of business owners reinforces this – it shows the ability to fill open positions with qualified candidates continues to be a challenge.”

Still, the wage increase is worth noting, with Paychex analysis finding the average small business hourly wage now hits $26.94, with growth now at 2.5 percent, up from 2.28 percent last August.

Broken down by geography, the report identified the South as the region with the strongest employment growth, while the West leads in hourly earnings growth: Texas is at the top for jobs, while California leads in wages.

In terms of industry, the leisure and hospitality sector saw the fastest increase in hourly earnings at 4.23 percent for February. The financial activities industry is experiencing the weakest small business employment growth, while the education and health services sector is now in last place among industries ranked by hourly earnings growth, experiencing a 2.39 percent wage increase for February.

Earlier this month, Paychex announced the acquisition of Lessor Group, an industry peer based in Denmark that provides a cloud-based payroll software solution.



The pressure on banks to modernize their payments capabilities to support initiatives such as ISO 20022 and instant/real time payments has been exacerbated by the emergence of COVID-19 and the compelling need to quickly scale operations due to the rapid growth of contactless payments, and subsequent increase in digitization. Given this new normal, the need for agility and optimization across the payments processing value chain is imperative.