Small Business Wage Growth Gains Momentum, Job Growth Holds Steady in October

Press Release from Paychex Inc.

ROCHESTER, N.Y., Oct. 29, 2019 /PRNewswire/ -- The tight labor market positively impacted wage growth in October, according to the latest Paychex | IHS Markit Small Business Employment Watch. Hourly earnings are on the rise, reaching 3.00 percent ($0.80) growth in October. Additionally, after hovering just above two percent to start the year, weekly earnings growth has quickly improved to 3.36 percent as month-to-month gains grow larger. At 98.14, the national jobs index remains essentially the same as last month (98.22).

The tight labor market positively impacted wage growth in October, according to the latest Paychex | IHS Markit Small Business Employment Watch.

"There was little change in the jobs index in October, but hourly earnings growth continued to accelerate, and weekly earnings gains reached a new series high, 3.36 percent," said James Diffley, chief regional economist at IHS Markit.

"The recruitment and retention challenges presented by this tight labor market are becoming more noticably reflected in employees' paychecks," said Martin Mucci, Paychex president and CEO. "We anticipate wage growth will continue as employers work to attract and keep top talent."

Broken down further, the October report showed:

  • The South remains first among regions in employment growth; the West retained its lead among regions in wage growth.
  • Tennessee remains the leader among states in small business job growth; New York took the top spot among states for wage growth.
  • Dallas is again the top metro for job growth; Los Angeles became the leading metro in wage growth.
  • Leisure and Hospitality reached 5.00 percent hourly earnings growth in October, best among industry sectors.

The complete results for October, including interactive charts detailing all data at a national, regional, state, metro, and industry level, are available at www.paychex.com/employment-watch. Highlights are available below.

National Jobs Index

  • Giving up a portion of its September gain, the pace of small business job growth remains a percentage point below a year ago.
  • At 98.14, the jobs index has remained essentially flat since July's 98.18.

National Wage Report

  • Hourly earnings growth continued its acceleration in 2019, reaching 3.00 percent in October.
  • One-month annualized growth for hourly earnings hit nearly four percent in October.
  • Just above two percent to start the year, weekly earnings growth has quickly improved to 3.36 percent as month-to-month gains grow larger.

Regional Jobs Index

  • At 98.97, the South was the only region to improve in October, gaining 0.04 percent and expanding its lead among the other regions.
  • The West has declined 0.38 percent during the past quarter and 1.49 percent during the past year, representing the weakest growth rates among regions.

Note: Percentages displayed in the regional heat map reflect 12-month changes.

Regional Wage Report

  • All regions saw accelerated wage gains in October.
  • The West continues to lead hourly earnings growth among regions, at 3.45 percent, though the Northeast is closing the gap with a strong 3.22 percent surge in October.

Note: Percentages displayed in the regional heat map reflect 12-month changes.

State Jobs Index

  • Texas dropped sharply in October, to 99.49, leaving Tennessee as the only state index above 100.
  • Down 0.43 percent from last month and 2.72 percent from last year, employment growth has slowed significantly in Washington, which now ranks only ahead of New Jersey among states.

Note: Analysis is provided for the 20 largest states based on U.S. population.

State Wage Report

  • New York leads states in hourly earnings growth (4.12 percent), followed closely by Illinois and California.
  • Indiana lags in hourly earnings growth at 1.27 percent, though Texas and Maryland are also reporting less than two percent gains.

Note: Analysis is provided for the 20 largest states based on U.S. population.

Metropolitan Jobs Index

  • At 100.65, Dallas remains the only metro index above 100, though it has fallen 2.10 percent during the past quarter.
  • Employment growth in Minneapolis declined sharply in October, to 98.01.
  • Up 2.04 percent from last year, Philadelphia has the best 12-month growth rate and ranks third among metros at 99.35.

Note: Analysis is provided for the 20 largest metro areas based on U.S. population.

Metropolitan Wage Report

  • Two California metros, Los Angeles (4.43 percent) and San Diego (4.41 percent), lead gains in metro hourly earnings.
  • Tampa and Minneapolis are the only two metros with hourly earnings growth below two percent.
  • Pairing more hours worked and a higher hourly rate, weekly earnings growth is surging in San Francisco, reaching six percent in October.

Note: Analysis is provided for the 20 largest metro areas based on U.S. population.

Industry Jobs Index

  • Trade, Transportation, and Utilities slipped further in October to 96.41, just ahead of the last-ranked sector, Manufacturing (96.39).
  • Education and Health Services is the only sector to post a year-over-year increase, a modest 0.02 percent.

Note: Analysis is provided for seven major industry sectors. Definitions of each industry sector can be found here. The Other Services (excluding Public Administration) industry category includes religious, civic, and social organizations, as well as personal services, including automotive and household repair, salons, drycleaners, and other businesses.

Industry Wage Report

  • Leisure and Hospitality reached 5.00 percent hourly earnings growth in October, best among sectors.
  • Manufacturing improved to 5.09 percent weekly earnings growth, continuing the recent trend of strong wage growth paired with slower job growth in the sector.
  • Education and Health Services ranks last among industry sectors, at 1.26 percent hourly earnings growth.

Note: Analysis is provided for seven major industry sectors. Definitions of each industry sector can be found here. The Other Services (excluding Public Administration) industry category includes religious, civic, and social organizations, as well as personal services, including automotive and household repair, salons, drycleaners, and other businesses.

For more information about the Paychex | IHS Markit Small Business Employment Watch, visit www.paychex.com/employment-watch and sign up to receive monthly Employment Watch alerts.

*Information regarding the professions included in the industry data can be found at the Bureau of Labor Statistics website.

About the Paychex | IHS Markit Small Business Employment Watch
The Paychex | IHS Markit Small Business Employment Watch is released each month by Paychex, Inc., a leading provider of payroll, human resource, insurance, and benefits outsourcing solutions for small-to medium-sized businesses, and IHS Markit, a world leader in critical information, analytics, and expertise. Focused exclusively on small business, the monthly report offers analysis of national employment and wage trends, as well as examines regional, state, metro, and industry sector activity. Drawing from the payroll data of approximately 350,000 Paychex clients, this powerful tool delivers real-time insights into the small business trends driving the U.S. economy.

About Paychex
Paychex, Inc. (NASDAQ: PAYX) is a leading provider of integrated human capital management solutions for payroll, benefits, human resources, and insurance services. By combining its innovative software-as-a-service technology and mobility platform with dedicated, personal service, Paychex empowers small- and medium-sized business owners to focus on the growth and management of their business. Backed by more than 45 years of industry expertise, Paychex serves approximately 670,000 payroll clients as of May 31, 2019 across more than 100 locations in the U.S. and Europe, and pays one out of every 12 American private sector employees. Learn more about Paychex by visiting www.paychex.com, and stay connected on Twitter and LinkedIn.

About IHS Markit(www.ihsmarkit.com)
IHS Markit (NYSE: INFO) is a world leader in critical information, analytics and solutions for the major industries and markets that drive economies worldwide. The company delivers next-generation information, analytics and solutions to customers in business, finance and government, improving their operational efficiency and providing deep insights that lead to well-informed, confident decisions. IHS Markit has more than 50,000 business and government customers, including 80 percent of the Fortune Global 500 and the world's leading financial institutions. Headquartered in London, IHS Markit is committed to sustainable, profitable growth.

IHS Markit is a registered trademark of IHS Markit Ltd. and/or its affiliates. All other company and product names may be trademarks of their respective owners © 2019 IHS Markit Ltd. All rights reserved.

Media Contacts

Lisa Fleming
Paychex, Inc.
+1 585-387-6402
lfleming@paychex.com
@PaychexNews

Kate Smith
IHS Markit
+1 781-301-9311
katherine.smith@ihsmarkit.com

Tess Flynn
Mower
+1 716-880-1488
tflynn@mower.com

At 98.14, the national jobs index remains essentially the same as last month (98.22).

Hourly earnings are on the rise, reaching 3.00 percent ($0.80) growth in October.

Paychex Logo (PRNewsfoto/Paychex, Inc.)

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SOURCE Paychex, Inc.

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