What's Happening?
In October, small business employees in the United States worked more hours, leading to an increase in their weekly earnings, according to a report by Paychex. The Paychex Small Business Employment Watch, which focuses on companies with fewer than 50
employees, noted a 0.44% rise in national weekly hours worked, marking the strongest gain since April 2021. Despite a slight slowdown in hourly earnings growth to 2.58%, the increase in hours worked resulted in higher weekly earnings for employees. This trend was observed across all U.S. regions, with positive 12-month growth in weekly hours worked. The report also highlighted that the Midwest continues to lead in small business employment growth for the 17th consecutive month.
Why It's Important?
The increase in hours worked by small business employees is significant as it suggests a potential positive shift in the economic landscape for small businesses. This trend could indicate that businesses are experiencing improved conditions, prompting them to maximize output with their current workforce. The data from Paychex is particularly valuable given the absence of the U.S. Bureau of Labor Statistics' monthly jobs report due to a government shutdown. As a result, reports from payroll companies like Paychex and ADP are gaining attention from economists and analysts seeking insights into employment trends. The increase in hours worked could be a precursor to future hiring if business conditions continue to improve.
What's Next?
With the ongoing government shutdown affecting the release of official employment data, reliance on private sector reports is likely to continue. Paychex and other payroll companies may see increased demand for their data as businesses and policymakers seek to understand labor market dynamics. Additionally, the impact of the recently passed One Big Beautiful Bill Act on tax guidance remains a concern for accountants and small business clients, particularly with the Internal Revenue Service's limited operations during the shutdown. The situation underscores the need for businesses to stay informed and adaptable in response to evolving economic conditions.
