Small Businesses Hired At a Slower Pace in June

Small businesses with fewer than 50 employees added jobs in June but at a slower pace than in May, while hourly earnings growth for workers held steady last month, according to the latest Paychex Small Business Employment Watch, released on July 2.

The national jobs index continued to represent employment gains in June (100.29) but growth was smaller than in May (100.58) and June 2023 (101.37). An index value of more than 100 shows job gains.

National hourly earnings growth held steady at 3.16% in June, consistent with the moderating trend reported during the first half of 2024, according to Paychex. One- and three-month annualized hourly earnings growth reported 3.04% and 2.85% in June, respectively, slightly below the 12-month growth rate (3.16%). In addition, weekly earnings growth (2.96%) improved for the third consecutive month, though the increases have been marginal (0.03%).

“Small businesses continued to add jobs across the country in June and there was little change in wage inflation, which reflects relative stability for small businesses,” John Gibson, president and CEO of Paychex, said in a statement. “The trends in our wage data over the first half of 2024 are also signaling steady hourly earnings growth heading into the second half of the year.”

According to the report, California (99.37) dropped to last among states for job growth in June and has reported an index level below 100 for three-straight months, indicating year-over-year job losses. Leisure and hospitality ranked last among sectors analyzed in California in June, slowing 2.70 percentage points over the last quarter. Weekly hours worked growth in leisure and hospitality across the state was down 1.77% last month.

“While jobs are growing nationally, small businesses in some geographies and industries continue to face a challenging operating environment due to complex regulations, a tight labor market, and inflationary pressures,” Gibson said. “We are continuing to see the impact of these challenges in the West region, particularly in the state of California, which came in last among states for job growth in June. At the same time, our customers are telling us they are being more selective in the hiring process and searching for candidates who will boost their culture and bottom line.”

The two largest industry sectors, education and health services (102.18) and professional and business services (100.20), increased their rate of small business employment growth from last month in June, according to Paychex.