What do workers want? More money! When do they want it? Now! A new Paychex | IHS Markit small business employment watch for November shows that the tight labor market continues to make for challenging hiring conditions.
The Small Business Jobs Index declined for the sixth consecutive month, falling 0.11% from October to 99.01 in November. Despite the low rate of job growth, the rate of hourly wage growth increased slightly, now standing at 2.38% ($0.63).
“With the Jobs Index at its lowest level since 2010, small businesses continue to have difficulty finding workers in the competitive hiring environment of 2018,” said James Diffley, chief regional economist at IHS Markit.
“Even as the seasonal rush approaches, we’re seeing restrained levels of job growth among small businesses,” said Martin Mucci, Paychex president and CEO. “In the new year, while business and consumer confidence is high, we expect employers will continue to be challenged with the low unemployment rate and rising wage rate levels.”
Broken down further by geography and industry, the November report showed:
- The top regions for employment growth and wage growth, respectively, are the South and West.
- Pennsylvania and Massachusetts are the weakest states for small business job growth; Arizona is the top state for wage growth.
- Dallas regained its top spot among metros in jobs growth, as did Riverside, California, in wage growth.
- Construction reached a new record high in hourly earnings growth at 3.31%.
National Jobs Index
- The downward trend continues from its recent peak of 100.78 in February 2017, with a 1.76% decrease in the pace of small business job growth.
- Just slightly above 99 in November, the Jobs Index declined for the sixth consecutive month.
National Wage Report
- Hourly earnings growth improved for the third consecutive month to 2.38%.
- Despite hiring difficulties, the rate of weekly earnings growth continued its decline, from 3.10% in August 2017 to 2.41% in November 2018.
- Following nearly 2 years of positive year-over-year growth, weekly hours worked growth turned negative in October and fell further in November, down 0.18%.
Regional Jobs Index
- The Midwest had a strong November increase, up 0.33%, and is once again above 99.
- With an index level of 98.28, small business employment growth in the Northeast remains below the rest of the country.
Regional Wage Report
- The wage gap is widening across regions as hourly earnings in the West ($28.21) are growing at 3.18% annually, while the South ($25.86) remains the slowest-growing region at 1.94%.
- Weekly earnings growth is the slowest among regions in the Northeast, 2.05%, with 1-month and 3-month annualized growth rates below 2%.
State Jobs Index
- Once again in November, Pennsylvania and Massachusetts have the weakest small business growth as both indexes fell below 98.
- Up 0.67% in November and 1.22% year-over-year, Wisconsin is once again the top-ranked state, with its fifth gain in the last 6 months.
- Besides Wisconsin, Arizona is the only other state with an index level above 100.
Note: Analysis is provided for the 20 largest states based on the U.S. population.
State Wage Report
- Despite slipping below 4% in November, hourly earnings growth in Arizona remains best among states, following its nearly $2.00 minimum wage hike at the start of 2017.
- Virginia and Texas have experienced extended decelerations in hourly earnings growth, with Virginia last among states at 0.41%.
Note: Analysis is provided for the 20 largest states based on the U.S. population.
Metropolitan Jobs Index
- With strong overall growth since the recession, Dallas is once again the top-ranked metro in November at 101.52, following a mixed performance last year.
- Following the state trend, Boston and Philadelphia have the weakest metro indexes, both below 98.
Note: Analysis is provided for the 20 largest metro areas based on the U.S. population.
Metropolitan Wage Report
- With its eighth straight increase at 4.65%, Riverside leads California and the nation in metro hourly earnings growth, overtaking Phoenix (4.41%).
- Since the beginning of 2016, hourly earnings growth in Minneapolis was stable at around 3.30%, but it has accelerated since the summer, improving to 3.66% in November.
- Houston and Dallas show the weakest wage gains in November, for both weekly and hourly earnings.
Note: Analysis is provided for the 20 largest metro areas based on the U.S. population.
Industry Jobs Index
- At 99.14, education and health services were the only industries to improve in November (up 0.20%).
- Down 0.02% in November and 0.17%, year-over-year, employment growth in the construction industry remains steady, with an index above 100.
- Above 99 as recently as May, manufacturing has quickly slowed to 97.32 during the past 6 months.
Note: Analysis is provided for seven major industry sectors.
Industry Wage Report
- Up 4.02% from last year, hourly earnings growth in leisure and hospitality hit its highest level in 2018 and continues to have the strongest hourly gains among industries.
- Since reporting began in 2010, construction reached a new record high in hourly earnings growth at 3.31%.
Note: Analysis is provided for seven major industry sectors.