Small business job growth dipped in September as wages grew

Job growth at small businesses moderated slightly in September, but hourly earnings growth reached 3.01%, up from 2.95% in August, payroll provider Paychex reported Tuesday.

The Paychex Small Business Employment Watch for September, which covers U.S. small businesses with fewer than 50 employees, showed the national jobs index slipping slightly in September to 99.84, although it has averaged 100.31 so far in 2024, representing modest employment growth. 

"It's almost like a flattish move the past few months," said Frank Fiorille, vice president of risk, compliance and data analytics at Paychex. 

Weekly hours worked growth (-0.16%) remained negative year-over-year for the 18th month in a row.   More than half of all states (29 of 50) reported an index of 100 or higher in September, although California was at the bottom of the list.

The Midwest (100.39) continued to be the strongest region, remaining the top region for small business employment growth for the fourth month in a row. Within the Midwest, Indiana (101.29) remained the top state for small business job growth for the third month in a row.

The West (3.54%) led all regions for hourly earnings growth for the 15th consecutive month and showed the largest negative change in job growth from the prior year. The region also reported a jobs index level of 99.09 in September, dropping 1.97 percentage points to rank last among regions.  

Education and health services (100.95) continued to be the top industry for small business job growth for the fourth month in a row in September, despite reporting the largest one-month slowdown among sectors (0.92 percentage points).

"The one key thing that we continue to watch and hear is that businesses are still having a hard time finding and attracting employees," said Fiorille.

He advised accountants to advise their small business clients about the requirements of the Corporate Transparency Act for beneficial ownership information reporting, which is new for this year. Businesses have to file the reports of their true ownership with the Treasury Department's Financial Crimes Enforcement Network as a way to deter money laundering and illicit activity.

"We're seeing and hearing that a lot of small businesses and CPAs are still unaware of it, or not sure what's going on and what to do," said Fiorille. Paychex recently did a webinar for CPAs about the new requirements and offers a service for its small business customers. "The clock is ticking and we advise businesses and CPAs to make sure, if they have to file, that they do that and not wait until the last minute," he added. "That's a good recommendation."