U.S. Small Business Job Growth and Wage Trends in January 2024

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January marks the 34th consecutive month of job growth for U.S. small businesses, according to the Paychex Small Business Employment Watch. The report reveals that wage growth for workers remains stable in the new year, with hourly earnings growth essentially unchanged at 3.47% since November.

John Gibson, Paychex president and CEO, notes the resilience of small and medium-sized businesses despite challenges such as a tight labor market, access to capital, rising regulations, and the cost of providing benefits. He highlights the stability of wage growth nationally, even with the implementation of 65 minimum wage changes in various states and localities on January 1.

The Jobs Index highlights include:

  • The national index at 100.69 indicates continued job growth, albeit at a slower pace.
  • All regions, with indexes above 100, report positive job growth in January, with the South leading the pace.
  • Tennessee, Texas, and Virginia lead among states with index levels above 102.
  • Dallas ranks first among top U.S. metros, showing increased job growth for three consecutive months.

In terms of industry and wage data:

  • The Education and Health Services sector leads in small business job growth, indicating strong and sustained growth for 33 consecutive months.
  • Hourly earnings growth stabilises at 3.47%, with the West leading regional growth and Washington reporting the highest state growth.
  • Seattle leads top U.S. metros with 5.27% hourly earnings growth in January.

Gibson emphasises the need for policymakers to address the cost and access to growth capital for small businesses and tackle long-term issues affecting the labor market to support continued growth, highlighting the positive macroeconomic data at the close of 2023, including a 3.3% GDP increase in the fourth quarter and the lowest annual unemployment rate since 1969. The complete Small Business Employment Watch results for January 2024 are available on the Paychex website.