What's Happening?
The January Paychex Small Business Employment Watch indicates that job and wage growth trends among U.S. small businesses have remained consistent as 2026 begins. The Small Business Jobs Index, which reflects payroll data from Paychex clients with fewer than 50 employees, increased slightly by 0.04 percentage points to 99.30 in January. Hourly earnings growth has been stable at 2.68% since July 2025. Despite these steady figures, challenges persist, including a limited supply of qualified labor and rising healthcare costs. The Midwest continues to lead in small business job growth, maintaining its position for the 20th consecutive month.
Why It's Important?
The stability in small business employment trends is crucial for the U.S. economy, as small businesses are
significant contributors to job creation. The consistent job growth suggests resilience in the sector despite broader economic challenges. However, the ongoing issues with labor supply and healthcare costs could hinder further growth. The steady wage growth, while not contributing to inflation, indicates a cautious economic environment where businesses are managing costs carefully. This stability is vital as the economy anticipates potential benefits from recent tax reforms, which could provide further economic tailwinds.
