Employees at small businesses saw their average hourly earnings hit a record high in December, while employment levels kept rising, according to a report released Tuesday by payroll giant Paychex.
Hourly earnings growth grew 4.27% compared to December 2020, reaching $30.00 last month, the highest level since reporting began 10 years ago on the
“It went from 100.72 in November to 100.94 this month, which is a nice seven-month streak of increases every month,” said Frank Fiorille, vice president of risk management, compliance and data analytics at Paychex. “It’s now up 7.31% during the past 12 months. It looks like small to medium-sized businesses, mom-and-pop shops, are coming back and recovering from the pandemic, which is really nice to see.”
The leisure and hospitality industry experienced double-digit hourly earnings growth of 10.69%, leading the way among the various industry sectors.
In terms of regions, the West overtook the South as the top region for small-business employment growth in December, while Texas remained the top state for small-business hiring, and Dallas the top metropolitan area. “The West was the highest region this month and surpassed the South, which historically has been the highest region,” said Fiorille. “It was interesting to see the West moving into first place.”
Weekly earnings growth in Florida grew to 5.01%, but it was the only state above 5%. North Carolina, Ohio, and Tennessee reported hourly earnings growth above 5% in December, topping the state rankings. The same states each ranked in the bottom five for growth in weekly hours worked. Meanwhile, Michigan (2.44%) and Maryland (2.54%) were the only two states with weekly earnings growth below 3%.
“Whether it’s weekly or hourly earnings, we’re still seeing some really big increases,” said Fiorille. “Obviously there are minimum wage increases there. The job market is pretty tight, and businesses have to pay up. We’re also seeing much higher bonuses and more bonuses for frontline workers in the leisure and hospitality sector. Leisure and hospitality continue to come back. There’s still a lot of wood to chop to get back to pre-pandemic, but it has come back pretty strongly every month, not only from an employment perspective, but also with wage gains.”
Paychex is predicting that similar trends will continue in the first quarter as some of the stimulus and pandemic relief programs from 2020 and 2021 unwind, and more people return to the workforce. “Some of the things that may have kept people on the sidelines are going to come off, and you might see more employment growth,” said Fiorille.
Accountants should keep their clients informed about these developments, including what happens with the Biden administration’s vaccine mandate for businesses, which will be coming before the Supreme Court after a number of states filed suit to stop it.
