2021’s Largest Booming Small Business Industry

Despite the competitive hiring environment, small business employment growth grew 0.26 percent in June, according to the data released in the latest report of the Paychex | IHS Markit Small Business Employment Watch.

It shows momentum in job growth with the Small Business Jobs Index gaining 4.53 percent during the second quarter of 2021 (in part driven by the 2020 comparison period).

Hiring is particularly strong in the leisure and hospitality sector, which gained 12.65 percent in the past quarter. Hourly earnings growth increased slightly, from 2.82 percent in May to 2.84 percent in June.

Wages are also on the rise in leisure and hospitality. The sector ranks highest in hourly earnings and hours worked growth, with weekly earnings growth up double digits.

“With re-openings across the country, the leisure and hospitality jobs index regained its pre-pandemic level,” said James Diffley, chief regional economist at IHS Markit.

In further detail, the June report showed:

• The South continues to lead all regions in small business job growth.
• Job growth in North Carolina spiked 6.36 percent during the second quarter.
• Tampa once again leads all metros job growth.

The national jobs index uses a 12-month same-store methodology to gauge small business employment trends on a national, regional, state, metro and industry basis.

National Wage Report

Hourly earnings growth ticked up slightly, from 2.82 percent in May to 2.84 percent in June.

Weekly earnings growth has slowed more than one percent during the past two months due to a reduction in weekly hours worked.

Regional Jobs Index

All four regions saw employment growth gains in June. The top-ranked region, the South, gained the least (0.05 percent). The lowest-ranked region, the Northeast, gained the most (0.45 percent).

At 99.43, the South remained the strongest region for small business job growth, more than one point above the next highest region, the West (98.25).

Regional Wage Report

Hourly earnings growth in the West was 3.18 percent, strongest among regions.

Hourly earnings growth in the Northeast slowed to 2.93 percent in June.

State Jobs Index

North Carolina has spiked 6.36 percent during the second quarter of 2021, best among states, improving its rank from 10th to 3rd.

The bottom two states last month, Washington and Virginia, had two of the top three largest increases this month.

Note: Analysis is provided for the 20 largest states based on U.S. population.

State Wage Report

Missouri (4.09 percent), led states in hourly earnings growth again in June, followed by Massachusetts (3.57 percent) and California (3.54 percent).

Illinois ranks last among states in hourly earnings growth (1.70 percent) and weekly earnings growth (0.85 percent).

Georgia remains the top state for weekly earnings growth (3.96 percent).

Note: Analysis is provided for the 20 largest states based on U.S. population.

Metropolitan Jobs Index 

Tampa continues to lead all metros at 101.60, despite a 0.61 percent decrease in May and 0.52 percent decrease in June.

Three of the four lowest ranked metros, San Francisco, Washington, DC., and Seattle, saw the largest increases in June.

Note: Analysis is provided for the 20 largest metro areas based on U.S. population.

Metropolitan Wage Report

Two California metros, Riverside and Los Angeles, lead earnings growth among metros.

Thirteen metros have hourly earnings growth below three percent.

Seattle ranks first among metros in weekly hours worked growth, 1.44 percent.

Due to a reduction in hours worked year-over-year, three metros have weekly earnings growth below one percent (Minneapolis, Detroit, and Baltimore).

Note: Analysis is provided for the 20 largest metro areas based on U.S. population.

Industry Jobs Index

Leisure and hospitality gained 12.65 percent during the second quarter of 2021. Its index now ranks third among sectors.

Construction had the largest decrease among sectors again in June (0.63 percent). This follows a decline in May of 1.78 percent.

Industry Wage Report 

Leisure and hospitality ranked first among sectors for earnings and hours worked growth, with weekly earnings growth up double digits.

Other services continue to lead in employment growth; due to an influx of part-time employees. However, the sector is lowest both in hourly earnings and hours worked growth.

For more information about the Paychex | IHS Markit Small Business Employment Watch, visit

paychex.com/watch.

Source: Paychex, Inc.

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