SurePayroll's Small Business Scorecard Review
Here's what's happening in the small business economy, based on November payroll data for our over 13,000 small business customers.
Each month, we take all of the contractor and employee payments that we've processed — we process nearly $3 billion in payroll payments annually — and aggregate the numbers to see national, regional and state trends in small business hiring, small business salaries, and small business use of independent contractors.
Last month, we reported that, nationally, jobs had increased by 3.2 percent year-to-date through the end of October while average paychecks had shrunk by 3.4 percent year-to-date.
This month, we are reporting that, nationally, jobs have increased by 3.6 percent year-to-date through the end of November while average paychecks have shrunk by 3.8 percent year-to-date.
This appears to be a continuation of what we've seen all year. It's a good news, bad news economy. The good news is that more people are getting jobs because small businesses are hiring. The bad news is those jobs are paying less than they used to on average.
While we often talk in terms of year-to-date numbers, it's also helpful to look at what happened this past month versus the prior month. On a regional basis, all four regions that we track — Midwest, Southeast, South and West — saw average small business sizes increase in November relative to October. But when it came to paycheck size, only the NorthEast and the South were up in November relative to October. In November, relative to what we saw in October, paychecks in the Midwest and the West were trending downward.
For the Midwest, this may be attributable to the region's heavy historical reliance on manufacturing, which is only now starting to rebound. In the West, it's probably caused by the salary inflation that occured in the West years ago when the West experienced a disproportionate bounty from the tech boom relative to the rest of the country. Salaries in the West were way up then and they are still coming back to Earth.
The bright side for the West is that the payroll shrink there appears to be slowing down a bit. Unfortunately, we can't yet say that for the Midwest. The South, on the other hand, is the clear regional winner year to date. They are the only region that is up both in terms of business size and average paycheck size.
Just as some regions do better than others, states have fared differently as well. We track data in all fifty states but we pay close attention to 21 states that we have earmarked as "benchmark states". In those states, 14 of our 21 benchmarks grew in size in November relative to how they closed out at the end of October. However, only 5 of our 21 benchmark states saw month-over-month increases in average paycheck size.
In the months to come, we will be closely watching the SurePayroll Pay Index to see if small business salaries are indeed rebounding.
I welcome any and all questions or suggestions regarding our Small Business Scorecard initiative. Feel free to contact me at malter@surepayroll.com or by phone at (847) 676-8420 ext. 7229.
Best regards,
Michael Alter
President
SurePayroll, Inc.
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