Small businesses are recording a significant jump in job growth this month, while weekly and hourly earnings grew as well, according to payroll giant Paychex.
The jobs growth in March was the biggest since the start of the pandemic and happened across all four U.S. regions, 18 of the 20 states, and 16 of the 20 metropolitan areas analyzed in the
The job growth indicates that the economy seems to be accelerating despite the ongoing pandemic. More states are allowing businesses to open up at greater capacity, ignoring warnings from health experts about the rise in COVID cases across the country. Minimum wage increases at the start of the year in several states are also helping fuel wage gains among workers in traditionally low-wage jobs.
“Clearly this month there was a change in trend, with a very nice uptick in the jobs index, in fact a trifecta,” said Frank Fiorille, vice president of risk management, compliance and data analytics at Paychex. “We saw wages go up and hours worked. From an overall standpoint, it was a very bullish report given what we’ve been seeing since COVID hit. In fact, the 0.3 percent increase in March was the largest we’ve seen in eight years. However, there’s still a long way to go to dig out of that big hole that COVID created regarding small-business employment. What really helped was we saw a nice pickup in leisure and hospitality, which makes sense as things come online and restaurants and stores open up. It validates what you’re seeing in some of the macro indicators. Things are starting to come back, but there’s still a lot of wood to chop to get back to pre-COVID levels.”
The Northeast led the way among regions of the country in hourly earnings growth at 4.07 percent, but all the other regions were below 3 percent. The South was the only region with negative weekly-hours-worked growth, which pulled weekly earnings growth down to 2.02 percent. Hourly earnings growth continues to be led by Northeastern states, including Massachusetts, New Jersey and Pennsylvania, all above 4 percent. North Carolina, Texas, and Illinois were the only states with hourly earnings growth below 2 percent. Washington and Massachusetts both had weekly hours worked growth above 1 percent.
Tampa remained the leading metro area on jobs growth, followed by Dallas. However, Seattle and San Francisco had the weakest numbers for metro areas on small-business job growth. Riverside, California ranked in first place among metro areas on hourly earnings growth at 6.43 percent and weekly earnings growth at 8.07 percent. It ranked in fifth place in weekly hours worked growth of 0.85 percent. In Houston, weekly hours worked declined 2 percent, likely due to the historic winter storm.
Accountants should continue to advise their small business clients about how to take advantage of pandemic aid like the Paycheck Protection Program and the Employee Retention Credit. “Clearly the PPP has helped a lot of these businesses without a doubt,” said Fiorille. “It definitely was a lifeline, but if you look beyond the PPP, there’s a lot of stuff in the stimulus programs. One that a lot of businesses are not looking to take advantage of is the retention credit. They can do that retroactively and go back last year and get that refundable credit. They really should talk to their CPAs and their accountants because in our analysis we think a lot of clients can qualify for that and it really could help them out, along with the PPP and all the other stuff that they’ve put into this.”
