Hourly Wages at Small Businesses Hit Record Level in December

As 2021 draws to a close, average hourly wages in small businesses are closing in at $30, according to Paychex IHS Markit Small Business Employment Watch.

December data shows hourly earnings growth improving to 4.27%, the highest level since Paychex began reporting 10 years ago.

Small-business hiring also closed in 2021 with optimistic statistics, an improvement of 7.31% over the previous year, according to the same report.

Hourly wages at small businesses hit a record high in December

Martin Mochi, Paychex CEO, summed up the stats.

“Employers are responding to the pressures of a tight labor market by raising wages, and workers are benefiting,” Moshi said.

Paychex Report Key Data for Small Business Owners

Hourly earnings growth exceeded four percent in all US regions. The West overtook the South as the number one area for small business growth. Texas maintains the highest honors in small business hiring, with Dallas ranked first in the metro area. Minneapolis ranks second, up 12.33% from a year ago. Denver ranks last in metro areas.

Leisure and Hospitality posted double-digit earnings per hour growth (10.69 percent) to lead all segments of the industry.

The Small Business Jobs Index rose to 100.94 in December, the highest level since August 2014. However, the growth rate has slowed over the past two months (0.50% in October, 0.27% in November and 0.22% in December.

Weekly earnings growth improved to 4.14 percent in December, joining the hourly gain of 4.27 percent. Both measures were under three percent as of June. While annual growth remains slightly negative (0.16%), weekly working hours have increased for three consecutive months.

Job growth by industry

The Leisure and Hospitality Index (105.68) increased by 1.39 percent in December and 21.36 percent over the past year.

Four industries declined in December (construction, education, health services, manufacturing, and financial activities). Gains in leisure and hospitality fueled the national increase.
The construction and financial activities sector ended 2021 with index levels below 99, recovering just over one percent during the year.

wages by industry

Leisure and Hospitality posted double digit earnings per hour growth (10.69 percent) to lead all segments. Trade, transport and utilities are second with 5.56 percent.

With education and health services improving 3.00 percent in December, all segments posted hourly earnings growth of 3 percent or more.

Weekly earnings growth is only 2.18% in the education and health services sector, which is six times lower than the leisure and hospitality growth rate (13.29%).

Photo: Depositphotos

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