What's Happening?
Small business employees in the United States worked more hours in October, leading to an increase in their weekly earnings despite a slowdown in hourly earnings growth. According to Paychex, a payroll company, the average number of hours worked by small
business employees rose across all regions, contributing to a national weekly hours worked growth of 0.44%, the strongest gain since April 2021. While hourly earnings growth slowed to 2.58%, weekly earnings growth increased to 2.94%, marking the highest level since January 2024. The Midwest continued to lead in small business employment growth for the 17th consecutive month. This trend may indicate potential hiring increases in the coming months, as businesses might opt to expand their workforce if positive sentiment persists.
Why It's Important?
The increase in work hours for small business employees is significant as it suggests a potential shift in employment trends. With the U.S. Bureau of Labor Statistics unable to issue its monthly jobs report due to a government shutdown, data from payroll companies like Paychex and ADP are becoming crucial for economists and analysts. The rise in weekly earnings could signal improved business conditions, prompting companies to consider hiring more staff. This development is particularly relevant for small businesses, which are often sensitive to economic fluctuations. The ongoing government shutdown also impacts the IRS's ability to provide guidance on recent tax changes, adding uncertainty for small business owners and accountants.
What's Next?
As businesses continue to assess their staffing needs, the increase in work hours could lead to more hiring if economic conditions remain favorable. The government shutdown's impact on the IRS may delay guidance on tax changes, affecting small business planning. Companies and accountants are closely monitoring these developments to adapt their strategies accordingly. The Paychex report suggests that if business sentiment remains positive, hiring could increase, potentially boosting employment rates in the small business sector.
Beyond the Headlines
The reliance on payroll company data due to the government shutdown highlights the importance of alternative sources for economic insights. This situation underscores the vulnerability of small businesses to policy changes and government operations. The ongoing need for IRS guidance on tax legislation further complicates financial planning for small businesses, emphasizing the interconnectedness of government actions and private sector operations.
