In January, the Paychex Small Business Employment Watch reported the 34th consecutive month of job growth for U.S. small businesses. The national job growth index remains above 100, indicating continued expansion, albeit at a slower pace. Wage growth for workers has stabilized at 3.47%, showing little change since November. Despite 65 minimum wage changes across states and localities on January 1, national wage growth remains steady. Small and medium-sized businesses are exhibiting resilience amid challenges like a tight labor market, access to capital, rising regulations, and the cost of providing benefits. The South leads regional job growth, with Tennessee, Texas, and Virginia reporting strong index levels. Dallas leads among U.S. metros in job growth, and the Education and Health Services sector tops industries for small business job growth. The report suggests that while macroeconomic data indicates a strong close to 2023, policymakers should address issues like access to capital and long-term labor market challenges to support ongoing small business growth, which plays a crucial role in the U.S. economy.
Source: Business Wire
As 2023 concluded, payroll payments per small business showed a moderation in growth, increasing by 1.7% in December, according to data from Bank of America. The report notes that while payroll payments consistently rose throughout the year, the pace of growth has significantly slowed from its peak in March 2022. Bank of America analysts suggest that this moderation could indicate more sustainable payroll growth in the future, potentially influenced by a slowdown in wage growth, particularly in sectors like leisure and healthcare that were heavily impacted by persistent labor challenges. The report emphasizes that the easing of labor shortages and a decline in wage inflation are contributing factors. The trends vary by industry, with lodging, restaurants, and retail experiencing some slowdown in payroll growth, while healthcare continues to see robust growth, reflecting post-pandemic staffing increases and heightened demand for health services among aging baby boomers.
The Biden administration has introduced measures to eliminate the use of salary history in determining pay for federal employees and federal contractors. The Office of Personnel Management has implemented a new regulation for federal agencies, prohibiting the consideration of salary history when setting pay for government roles. Additionally, a proposed rule for federal contractors, set to be published by the Federal Acquisition Regulatory Council, aims to restrict the collection and use of job applicants’ past compensation information during employment decisions. The proposed rule also includes provisions for pay transparency, mandating contractors to disclose compensation ranges in job postings. These initiatives, designed to address pay inequality and promote transparency, align with the administration’s commitment to advancing pay equity. The actions coincide with the 15-year anniversary of the Lilly Ledbetter Fair Pay Act, emphasizing the ongoing efforts to combat pay discrimination, particularly affecting women and workers of color. The federal employee regulation will take effect 60 days after its push on January 30, while the proposed rule for contractors will undergo a 60-day public comment period.
Source: The Hill