Hourly Wage Growth Among U.S. Small Business Workers Near Five-Year Low

According to the Paychex Small Business Employment Watch for August, job growth among U.S. small businesses with fewer than 50 employees remained flat, consistent with trends observed for the last year, while national hourly earnings growth for workers reached its lowest level since December 2020 at 2.58%, continuing to trend below three percent for the 10th consecutive month.

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The Small Business Jobs Index, which is a primary component of the Small Business Employment Watch report, measures the pace of job growth nation-wide using payroll data from Paychex’s small business customers. At 99.83 in August, the national jobs index level has been consistent for the last quarter (+0.02 percentage points) and year (-0.06 percentage points).

“Our latest employment data once again underscores the stability and resilience of the small business labor market,” said John Gibson, Paychex president and CEO. “Although job growth has remained flat over the last year, the continued decline in wage inflation should create a more favorable environment for small business owners seeking to hire and compete for talent. All regions across the country have experienced hourly earnings growth below three percent since April.”

Jobs Index and Wage Data Highlights

• The national Small Business Jobs Index for August (99.83) was 0.06 percentage points off the pace set in August 2024 (99.89).
• Though modest, the national jobs index has reported consecutive month-over-month gains for the first time since June 2023.
• The Midwest (100.29) has led all regions in small business employment growth for the past 15 months.
• Texas’ jobs index rose by 1.13 percentage points from the previous month in August (101.80), ranking first among states and marking its highest pace of job growth since March 2024 (102.63). Leading the way, Dallas (101.04) reclaimed the top spot among metros in August, while neighboring Houston (100.90) trailed closely behind at No. 2.
• Education and Health Services (101.28) was the strongest sector across all four regions in August and has led all sectors in small business job growth nationally for the 15th consecutive month.
• The Manufacturing jobs index (99.20) increased 0.58 percentage points in August from July. It is the only sector with a 2025 year-to-date average pace of job growth (98.72) that surpasses its average pace in 2024 (98.65).

More Information

For more information about the Paychex Small Business Employment Watch, visit the website and sign up to receive monthly Employment Watch alerts.

About the Paychex Small Business Employment Watch

The Paychex Small Business Employment Watch is released each month by Paychex, Inc. Focused exclusively on businesses with fewer than 50 workers, the monthly report offers analysis of national employment and wage trends and examines regional, state, metro, and industry sector* activity. Drawing from the payroll data of approximately 350,000 Paychex clients, this powerful industry benchmark delivers real-time insights into the small business trends driving the U.S. economy. The jobs index is scaled to 100, which represents no year-over-year change in job growth among same store businesses. Index values above 100 represent new jobs being added, while values below 100 represent jobs being lost.

*Information regarding the professions included in the industry data can be found at the Bureau of Labor Statistics website.

About Paychex

Paychex, Inc. (Nasdaq: PAYX) is the digitally driven HR leader that is reimagining how companies address the needs of today’s workforce with the most comprehensive, flexible, and innovative HCM solutions for organizations of all sizes. Offering a full spectrum of HR advisory and employee solutions, Paychex pays 1 out of every 11 American private sector workers and is raising the bar in HCM for nearly 800,000 customers in the U.S. and Europe. Every member of the Paychex team is committed to fulfilling the company’s purpose of helping businesses succeed. Visit paychex.com to learn more. Visit paychex.com to learn more.

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