Employment at small businesses increased in March at the highest rate in over two years, according to payroll figures from Intuit.
Intuit’s Small Business Employment Index indicated that small business employment increased by 0.3 percent in March, while monthly compensation and the number of hours worked also increased.
Intuit estimated that small business employment grew at an annual growth rate of 3.8 percent. The figures are based on small businesses with fewer than 20 employees that use Intuit Online Payroll. Another payroll provider, ADP, also reported an increase in small business hiring in March (see
“This is the strongest small business employment report we have had in a long time,” said Susan Woodward, the economist who worked with Intuit to create the index. “Yet at the same time, the hiring rate has remained flat at just above five percent since May 2009. This indicates that small firm employees are staying with their current employers, rather than leaving for bigger firms. In normal times, the turnover at small firms, which typically pay less than their larger counterparts, is high. Currently, the turnover rate is still low compared to normal.
“However, we are not out of the woods yet,” she added. “While the various indicators of this market are the strongest we’ve seen in a while, the rate of increase will not get us back to full employment anytime soon.”
Among small businesses using Intuit Online Payroll, average monthly hours worked increased by 0.5 percent, or 36 minutes, while average monthly compensation increased by 0.7 percent, or $18 per worker.
The employment growth for March equated to approximately 65,000 new jobs in March, though Intuit said it plans to recalibrate its Employment Index in the coming months and expects these numbers to be lower. The recalibration will be based on new data provided by the U.S. Bureau of Labor Statistics, which are used as inputs into the Index.
Based on February’s numbers and revised national employment data from the Bureau of Labor Statistics, Intuit revised upward the previously reported February growth rate to 0.4 percent. This equates to 75,000 jobs added in February, up from a previously reported 55,000 jobs, though these numbers are expected to be lower once the Index is recalibrated.
Small business hourly employees worked an average of 111.9 hours in March, an increase of 0.5 percent from the revised figure of 111.3 hours in February, making for a 25.8-hour workweek, according to Intuit. The average monthly pay for all small business employees increased to $2,785 in March, an increase of 0.7 percent from the February revised figure of $2,767 per month. The equivalent annual wages would be about $33,400 per year, which is part-time work for many small business employees.
Intuit found overall employment growth in all census divisions for March, although a state breakdown showed slight decreases in three states.
“The decreases in the employment growth rates for Oregon, Pennsylvania and Illinois are so statistically close to zero they are not cause for concern,” said Woodward. “By contrast, things are beginning to look encouraging for New York, which is showing a positive change in small business employment growth after several months of decreases. The state may be doing better because a meltdown in Europe now looks less likely.”
