As wage patterns continue to be a matter of concern for small business owners nationwide, Square has stepped in with a solution. The fintech firm has launched the Square Payroll Index, a comprehensive economic tool that draws on Square’s vast database to illuminate hourly earnings of retail and restaurant workers across the U.S.
With many small businesses in the retail and restaurant sectors still recovering from the pandemic’s economic turbulence, understanding wage trends is paramount. The Square Payroll Index promises to provide this crucial data, serving as a guide for small business owners, policymakers, and the media to navigate wage and earnings fluctuations both nationally and on a metropolitan scale.
So, what do the numbers say?
Despite experiencing a slowdown in growth over the past months, average hourly earnings (including tips and overtime pay) are growing faster than base wages, outstripping inflation. In September, the median earnings for a food and drink worker was pegged at $17.44, combining a base wage of $13.64 with tips and overtime. For retail workers, the median figure was $16.31 per hour, with a base wage of $15.80.
Such granular insights are made possible by Square’s unparalleled access to payroll data. Every month, the company processes wages for hundreds of thousands of hourly workers, accumulating to over $6 billion in annual payroll. This positions Square at a unique vantage point to gauge the financial health and trends within two of America’s most common occupations.
Saumil Mehta, Square’s Head of Point of Sale and Omnichannel, emphasizes the significance of these sectors to the broader economy. “We know that hiring and retaining good staff is a persistent challenge for our sellers. By tapping into Square Payroll data to report on wage growth in these key sectors, we can help our sellers continue to build strong teams and also add a valuable new metric to the public conversation.”
However, it’s not all positive news. The recent data indicates that the surge in hourly earnings that marked the post-pandemic job boom has tapered off. Average hourly earnings growth now sits below its 2019 mark, with Square’s Research and Data Lead, Ara Kharazian, noting a decline from the highs of early 2022. Yet, even as the job market adjusts, the data underscores that wage growth has consistently outpaced inflation for a full year, offering a silver lining for workers.
Interestingly, workers in the food and drink domain have fared better in wage growth compared to their retail counterparts. As of September, for the twelfth consecutive month, Square’s data reveals that growth in average hourly earnings has consistently outstripped inflation, which stood at 3.7% for August 2023.
Small Business Deals
For small business owners, this kind of data can be instrumental in hiring and retention strategies, especially as they compete in a still-challenging market. Moreover, tools like Square’s Payroll Index can play a pivotal role in providing the insights needed for strategic decision-making.
Square continues to position itself at the intersection of commerce and fintech, offering an array of solutions tailored for businesses. From restaurant and retail operations software to financial services and staff management capabilities, Square stands committed to empowering businesses worldwide.