Small Business Wage Growth at All Time High

November 2019 Small Business Employment Statistics

According to the latest index report by Paychex and IHS Market, the average hourly earnings are up by 3.11% among employees of small businesses. This is the highest growth in wages since 2011, which is in part driven by low employment in the U.S.

The Index monitors performance in two areas: employment numbers and wages, both of which give us a number of November 2019 small business employment statistics.

November 2019 Small Business Employment Statistics

The Small Business Employment Watch indicates weekly earnings will continue to grow, this includes the November rate increase of 3.75 %. The average hourly earnings across the nation has reached $27.59 with the trend in November standing just above 98 in the index. The hourly wage has increased by 3.11% since last year up by $ 0.83.  Currently, weekly hours worked are up at 0.76 %, the largest increase since May 2015.

Businesses engaged in the leisure and hospitality sectors lead all other sectors in hourly earnings growth at 5.16%. Manufacturing remains above 4% in hourly earnings growth, though gains slowed slightly in November.

With a 0.10 % peak during the past quarter, the national index has a positive three-month growth rate for the first time since March 2017. “We’ve seen a steady climb in hourly earnings growth, now reaching the highest levels in nearly a decade”, said Martin Mucci, Paychex president and CEO.

Nationwide Score

On employment growth, Southern states lead the nation in small business employment growth at 98.93 in the index. Among which Tennessee leads at 100.50 and is the only state with an index above 100. It is up by 0.82 percent in the index from last year. Texas is a close second in the index reaching 99.64 with a nominal 0.22% decline from last year. Texas joins Indiana with the weakest hourly earnings gains among states in the index. With both of them registering less than two percent growth from last year.

The Midwest (-1.51%) and West (-1.30 %) are seeing their weakest 12-month growth rates among regions. While the Northeast region has seen a mere 0.63% decline in the 12-month period. Conversely, when it comes to wages the West (3.67 percent) and Northeast (3.41 percent) far outpace the South (2.50 percent) and Midwest (2.62 percent) in hourly earnings growth.

The West and Northeast have three-month annualized hourly earnings growth over four percent as gains have accelerated in both regions during the past quarter.

At the top of the index, New York’s impressive 4.39 % growth in hourly earnings now stands at a three-month annualized growth above five percent. California leads with a 4.24% increase in hourly earnings, while Arizona at 2.11 % has slowed significantly this year. Average hourly earnings in New York now stand at $28.10. Texas is at the bottom of the index with wage increase up only at 1.94% with hourly earnings of $ 26.97.

Noticeably, Missouri (-0.73%) and Washington (-0.53%) fell below 97 and are now at the bottom of the state rankings with significant declines in November.
“Wage increases are finally beginning to reflect the tight labor market for small businesses,” said James Diffley, chief regional economist at IHS Markit.

Battle of the Cities

Among the Metropolitan job index, Dallas continues to lead small business employment growth at 100.44. This is despite a slight decline in November by 0.21 from the previous month. Up 0.91 percent in November, Tampa surged to second-best among metros at 99.53.up by 0.91% . At the bottom, New York joins with the lowest score in November’s index. Seattle scored relatively low from among the 20 metropolitan cities scoring 96.25 in the index down by 0.74% from October.

Los Angeles, San Francisco, and San Diego lead the nation in hourly earnings growth with rates above 4%. Los Angeles has seen hourly earnings growing by 4.87% from last year with an average hourly wage of $30.47. Tampa, Minneapolis, and Houston lag in hourly earnings growth, failing to pass 2%.

Overall Industry Health

Across the board, there was little change in employment growth rates (0.03%) among industries in November. However, all sectors are now below 100. In comparison with the last quarter, it is up by 0.10, the national index has a positive three-month growth rate for the first time since March 2017.

Services such as public administration education and health lead other sectors at 99.88 points in the index. This is despite the fact that they are down by 0.18% from October’s index.

They are followed closely by the services (95.05) sector and construction sector 98.84 in the index. Manufacturing and trade, transportation, and utilities had the strongest gains from the previous month but remain below 97. Manufacturing saw 0.17% increase from October while trade, transportation, and utility sector saw a 0.24% spike. However, manufacturing is still 0.78% down from last year’s index.

On average hourly earnings in leisure and hospitality lead with $17.71 up by 5.16% from the same time last year. Followed by the manufacturing sector with a 4.04% increase from last year at $27.51. Though at the bottom of the wages data education and health services showed an increase of 1.5% at average hourly earnings of $28.26.

Released each month by Paychex and IHS Markit, the Small Business Employment Watch examines employment and wage trends throughout the country. The report draws data from payroll information collected from Paychex’s roughly 350,000 clients. It provides insights into economic trends at the national, regional and local levels based on this information. It compares data from among 20 of the largest states based on the U.S. population and seven major industries.



Samson Haileyesus Samson Haileyesus is a staff writer for Small Business Trends and has several years of progressive experience in media, communication and PR working with government, NGOs and private sector.

2 Reactions
  1. Wages continue to rise as spending power rises. This is good for businesses will thrive because of this.

  2. Yes. It all depends on this. I guess it varies depending on the city.