Hourly wage growth falls below 3 percent, while job growth for U.S. small businesses remains steady

The Paychex Small Business Employment Watch for August, which reflects U.S. small businesses with fewer than 50 employees, reported that hourly wage growth for workers fell to 2.89%, the first time growth has been below three percent since January 2021. Additionally, annualized monthly hourly wage growth fell to 1.91%. The national small business employment index averaged 100.37 for eight months of 2024, representing modest employment growth.

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National hourly wage growth fell below 3 percent for the first time since January 2021, according to the August Paychex Small Business Employment Watch. (Graphic: Business Wire)

“Our monthly jobs and wages report 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. labor force,” said John Gibson, president and CEO of Paychex. “Our data showed moderate changes in employment growth through the eight months of 2024, even though the jobs indexes were below 100 in July and August. This supports broader trends of a cooling labor market and the Fed’s widely reported intention to begin cutting interest rates soon.”

“After holding steady for several months, hourly wage growth continued to slow in August,” Gibson added. “Dropping below 3 percent for the first time in three years is another notable sign that the labor market is edging closer to pre-pandemic levels.”

Highlights of the jobs index and wage data

• The national employment index was 99.89 in August, up 0.02 percentage points from July. However, the index was still slightly below 100, indicating a nominal annualized loss of jobs.
• National growth in hours worked per week (-0.08%) remained negative year-on-year for the seventeenth consecutive month, although annualised growth in one month was positive for the first time since January.
• The Midwest (100.50) remained the top region for small business employment growth for the third straight month. Indiana (101.87), which leads the region and the nation, was again the top state for small business employment growth in August and is the only state with a positive 12-month change rate (0.26 percentage points).
• Education and health care (101.87) remained the largest manufacturing sector for national job growth for the third straight month.
• The West (3.55%) ranked first among regions for the 15th consecutive month and was the only region to report hourly wage growth of more than three percent in August.
• For the 10th month in a row, the construction sector was the sector with the largest growth in terms of hourly wages (3.66%), weekly wages (3.81%) and hours worked per week (0.27%).

The complete Small Business Employment Watch results for August 2024, including interactive charts with detailed data at the national, regional, state, metro, and industry sector levels, 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 published monthly by Paychex, Inc. Focused exclusively on businesses with fewer than 50 employees, the monthly report provides analysis of national employment and wage trends and examines regional, state, metro and industry sector activity. Based on payroll data from approximately 350,000 Paychex clients, this powerful industry benchmark provides real-time insight into the small business trends driving the U.S. economy. The employment index is scaled to 100, which represents no year-over-year change in same-store job growth. Index values ​​above 100 indicate new jobs being added, while values ​​below 100 represent job losses.

About Paychex

Paychex, Inc. (Nasdaq: PAYX) is a leading HCM company that provides a full suite of technology and consulting services in human resources, employee benefit solutions, insurance and payroll. The company serves more than 745,000 clients in the U.S. and Europe and pays one in 12 U.S. private sector workers. Paychex’s more than 16,000 people are dedicated to helping companies succeed and building thriving communities where they work and live. For more information, visit paychex.com.

View the source version on businesswire.com: https://www.businesswire.com/news/home/20240903840602/en/

Paychex stock at the time of the news release rose by +0.05 % to 118.2EUR on the Tradegate exchange (September 3, 2024, 2:23 PM).

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