Paychex Sees Decline in Small Business Employment Growth in December

Payroll giant Paychex reported a slight decline in small business employment growth in December.

The Paychex | IHS Small Business Jobs Index, which Paychex compiles with the research firm IHS, slid to 100.37 in December, down 0.05 percent from November and 0.19 percent from 2014. The Mountain region was the top-performing regional index and had the strongest 12-month growth rate. Dallas remained the top-ranked metropolitan area, outpacing other metro areas throughout 2015. “Other Services (except Public Administration),” as defined by the Bureau of Labor Statistics, ranked as the top industry sector, followed by Construction.

“We’ve continued to see consistent job growth over the base year for small businesses under 50 employees, and for four years it’s been over 100,” said Paychex president and CEO Martin Mucci. “The index for four years has been over 100, and that continues to be good news.”

Among the states, Texas took the top spot over Washington in terms of small business employment growth, followed by Florida and Georgia. “That’s really where the strongest growth in small business employment is happening,” said Mucci.

While Texas is doing well, particularly in Dallas, Houston is continuing to feel the impact of declining oil prices on employment.

“Houston has been really hurt with the lower oil prices, and small businesses around that,” said Mucci. “Houston is down 3 percent from last year. Dallas is up 3.5 percent, so Texas is still very much a tale of two cities. Dallas is very strong, topping the whole index.”

Mucci also pointed to signs of a turnaround in New Jersey. “New Jersey is up 2.5 percent from last year, but they were pretty low last year, so they continue to be at the lower end of the index,” he said. “They’re around 100, but they’re bouncing back somewhat from their low point of last year. That’s good to see.”

The upward trend in “Other Services” employment indicates more discretionary spending on services such as personal care and pet care. “We see it as two-edged,” said Mucci. “One, it’s good that people are spending more discretionary income, but on the other side, a lot of those are part-time type positions. I think it’s a continuation of [employers] being positive, but careful and cautious. They’re adding more part-time employment.”

He sees a continuing role for accountants in advising their business clients on topics such as the Affordable Care Act, particularly after the IRS recently announced an extension of some of the deadlines for employers to submit forms (see Some Obamacare Reporting Requirements for Employers Extended by IRS).

“The Affordable Care Act has now gotten a little bit of a reprieve with a 60-day extension,” said Mucci. “This is for larger businesses with over 50 employees, but they’ll be looking to accountants to ask, ‘What do I do now that I have a 60-day extension to furnish the ACA forms and a three-month extension to file those forms?’ That’s giving businesses who the Affordable Care Act applies to a little bit more time to pull this data together, which has been very difficult for a lot of firms.”

He also sees a role for accountants in advising business clients on whether to hire full-time or part-time workers, along with classifications of employees versus independent contractors, as well as new overtime rules that are expected to be issued by the Labor Department later this year on when employees are entitled to overtime pay. The Labor Department also recently issued new gudiance on classication of independent contractors. “I think accountants are going to be very busy fielding questions,” said Mucci.

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