Small Business Hiring and Wage Growth Slow as Impacts of the Coronavirus Pandemic Begin to Take Effect

ROCHESTER, N.Y., March 31, 2020 /PRNewswire/ -- The latest Paychex | IHS Markit Small Business Employment Watch shows a slight decrease in both small business employment and wage growth in March. The report is based on data through March 19, a time when many businesses began to modify operations as a result of the COVID-19 outbreak. At 98.21, the jobs index slowed 0.11 percent from February and 0.57 percent year-over-year. Hourly earnings growth dipped to 2.68 percent ($0.72), while weekly earnings growth also decelerated to 3.08 percent.

"With the reporting window closing on March 19, the Small Business Jobs Index was little changed in March, our last look before the full impact of coronavirus disruption," said James Diffley, chief regional economist at IHS Markit.

"While limited at this reading, we're beginning to see the effects of the COVID-19 crisis impacting hours worked, hiring, and numbers of workers," said Martin Mucci, Paychex president and CEO. "We've been impressed with the speed of the federal government in approving a number of measures to offer relief for small businesses and their employees through the Families First Coronavirus Relief Act, as well as the just-passed Coronavirus Aid, Relief, and Economic Security (CARES) Act. Paychex is actively involved in helping our clients navigate these new support systems and we encourage them to visit payx.me/covid19 for the latest."   

The March report shows several employment and wage growth factors that may be attributed to the COVID-19 pandemic:

• At 97.45, the West had the steepest employment growth decline in March, down 0.19 percent.
• Weekly hours worked growth in the West declined considerably in March as the one-month annualized growth rate fell 2.47 percent.
• Weekly hours worked growth fell sharply in Leisure and Hospitality in March, with the one-month annualized growth rate declining 6.58 percent.
• Down 0.39 percent, small business job growth in Leisure and Hospitality slowed most among industry sectors during the first quarter of 2020.
• Positive earnings growth momentum toward the end of 2019 has reversed during the first quarter of 2020.

The complete results for March, 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

• The Paychex | IHS Small Business Jobs Index slowed 0.11 percent from the previous month and 0.57 percent year-over-year.
• At 98.21, the national index has remained in a narrow range during the last ten months, dating back to the summer of 2019.

National Wage Report

• Hourly and weekly earnings growth continued their 2020 moderation in March, sliding to 2.68 percent and 3.08 percent, respectively.
• Positive earnings growth momentum toward the end of 2019 has reversed during the first quarter of 2020.
• Though weekly hours worked continue to show slight gains from a year ago, one-month and three-month annualized growth is negative once again in March.

Regional Jobs Index

• At 97.45, the West had the steepest decline in March, down 0.19 percent.
• Despite a modest decline in March, the Northeast remains up 0.54 percent from a year ago.

Regional Wage Report 

• After a strong finish in 2019, hourly earnings growth in the Northeast slowed again to 2.84 percent.
• The Midwest reported a modest increase in hourly earnings to 2.40 percent, the only region to improve in March.
• Earnings growth remains the strongest in the West, though weekly hours worked growth declined considerably in March as the one-month annualized growth rate fell 2.47 percent.

 State Jobs Index

• Tennessee gained 0.21 percent in March, bringing its index to 100.71 and reinforcing its position as the top-ranked state.
• Missouri (0.82 percent) and North Carolina (0.80 percent) had notable increases in March.
• At 97.21, Illinois fell 0.56 percent in March with its index now ranking ahead of only California among states.

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

State Wage Report

• California leads states in hourly earnings growth at 3.42 percent, with Illinois, New York, and Georgia as the only other states above three percent.
• Ranked last among states for the past five months, Texas dropped further in March to 1.00 percent hourly earnings growth.

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

Metropolitan Jobs Index 

• At 100.30, Tampa overtook Philadelphia as the top-ranked metro index with the strongest one-month gain, 0.56 percent.
• As oil prices fell, the Texas metros of Dallas and Houston both saw index declines of a half-point in March.

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

Metropolitan Wage Report

• Los Angeles leads metros in hourly earnings growth at 3.76 percent, followed closely by San Francisco and Baltimore.
• One of the few metros to improve in March, Denver moved above three percent hourly earnings growth and is approaching four percent weekly earnings growth as weekly hours worked growth ranks first among metros.
• Both hourly and weekly earnings growth are now below three percent in the New York metro as weekly hours worked continues to decelerate.

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

Industry Jobs Index

• Construction and Financial Activities were the only two industry sectors to improve rates of job growth in March.
• At 96.39, Manufacturing had the biggest decline among metros, 0.36 percent, falling further behind other industry sectors.
• Down 0.39 percent, small business job growth in Leisure and Hospitality slowed most among industry sectors during the first quarter of 2020.

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  

• At 5.25 percent hourly earnings growth in March, Leisure and Hospitality is more than two percent ahead of the next highest sector (Manufacturing: 3.13 percent).
• Weekly earnings growth remains above four percent in the Trade, Transportation, and Utilities sector despite decelerating for the fifth straight month.
• Construction leads sectors in weekly hours worked growth, up 0.86 percent from a year ago and holding steady during the past several months.
• Weekly hours worked growth fell sharply in Leisure and Hospitality in March, with the one-month annualized growth rate declining 6.58 percent.
• Though year-over-year weekly earnings gains remain strong in the Leisure and Hospitality sector (4.57 percent), the more recent three-month annualized growth rate is -3.44 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.

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 human resources, payroll, benefits, 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 © 2020 IHS Markit Ltd. All rights reserved.

Media Contacts

Lisa Fleming
Paychex, Inc.
+1 585-387-6402
[email protected]
@PaychexNews 

Kate Smith
IHS Markit
+1 781-301-9311
[email protected]

Tess Flynn
Mower
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[email protected]

SOURCE Paychex, Inc.

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