SurePayroll's Small Business Scorecard Review

Here's what's happened in the small business economy this past month, based on payroll data for our over 15,000 small business customers.

All's Quiet on the Small Business Front
While Americans seem to be fascinated with the hit TV show American Idol, economists are watching another fascinating show: American Idle. I-D-L-E.

We’ve analyzed the paycheck data for our over 15,000 small business customers, and the results are quite telling: for small businesses, it’s an idle economy. Slow growth.

While the data reveals a few mildly encouraging signs, there are other indications that the short-term outlook is murky for small businesses and the U.S. economy as a whole.

Small business hiring continues to spin its wheels with no sign of going anywhere soon. On the positive side, the Scorecard hiring index ended the month at 10,458 nationwide – a .22% increase from the March figures. That’s a significant bump over the growth rate we saw in March and the highest number we’ve seen all year.

But even so, it’s still less than a quarter of a percent. The average number of employees per business went up an anemic .01 from 5.86 in March to 5.87 in April, reinforcing the fact that small businesses simply aren’t hiring new employees. Year to date in 2005, small business hiring is up only a paltry 0.2%.

Slow Salary Slide
While job growth remained static, small business salaries continued their slow slide. The SurePayroll Pay Index dropped yet again from 942 to 935 – the lowest point all year and the largest single month decrease since December. Average small business salaries are down 1.8% year to date. April's 1.8% year-to-date drop translates to an annualized rate of 5.27%, exceeding the salary decline we saw in 2004.

Free Agent Nation
April was also the sixteenth consecutive month the Scorecard reported an increase in the number of independent contractors used by small businesses. The use of independent contractors can be another telltale sign of employer uncertainty because it demonstrates that small business owners are unwilling to lock themselves into long-term human resource solutions.

Overall, our data clearly demonstrates a trend of stagnant job growth and growing economic uncertainty among small businesses.

Variance Among Regions and States
On a regional basis, small business size is trending down in the Midwest and the South year to date. The West is down slightly, but essentially is flat. The NorthEast is on track to be the regional success story for 2005. Hiring there is up 3.4% year to date.

Regionally, April trends were identical to March trends. Average small business paychecks are up in the Midwest and the South year to date, and down in the NorthEast and West.

As depicted in the graphic below, results varied from state to state. The Scorecard comprised data from all fifty states but we pay close attention to 21 states that we have earmarked as "benchmark states": Arizona, California, Colorado, Florida, Georgia, Illinois, Indiana, Maryland, Michigan, Minnesota, Nevada, New Jersey, New York, North Carolina, Ohio, Oregon, Pennsylvania, Texas, Utah, Virginia, and Washington.

Year to date, salaries are up in 12 of our 21 benchmark states. Firms grew in size in 13 of our 21 benchmark states.

Data for our benchmark states is available – just send me an email and let me know if you want the data for your state.

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.

Small Business Scorecards Archive:
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