Nationally, small business hiring was up 0.7 percent in the second quarter. That's a slowdown from the first quarter 2009 when we saw a hiring increase of 0.8 percent. Still, it's respectable growth in light of the tough economy.
Year to date, small business hiring, as measured by changes in the average size of a U.S. small business, is up 1.5 percent.
Salaries, on the other hand, have consistently been trending in the opposite direction. Year to date, the average small business salary has dropped 4.3 percent.
The bad news for the unemployed is that salary declines appear to be accelerating. Salaries declined 2.5 percent in the second quarter, whereas they declined only 1.8 percent in the first quarter.
While salary declines reduce consumer purchasing power, lower salaries do make it easier for business owners to hire new employees.
Small Business Optimism Recovers
For June 2009, we saw an increase in small business owner optimism levels.
In response to a survey we conducted at the end of June, 79 percent of responding small business owners indicated that they were optimistic about the small business economy.
That represents an uptick in optimism from May 2009 when 73 percent of respondents indicated they were optimistic about the small business economy.
In April 2009, only 66 percent of respondents were optimistic.
The SurePayroll Hiring Index
Our SurePayroll Hiring Index rose 17 points to 11,447 in June, up from 11,430 at the end of May.
This represents a 0.2 percent month-over-month increase in hiring. It's the smallest monthly increase in hiring that we've seen this year.
As of the end of the second quarter, the Hiring Index is up 1.5 percent for the year. Despite the difficult economy, many small businesses are still hiring.
The SurePayroll Hiring Index is calculated from the actual payroll payments made by tens of thousands of small businesses that rely on our payroll service. The Hiring Index tracks the total workforce for a small business, including employees and contractors.
Salaries Decline…Again
We track small business salaries with our SurePayroll Pay Index, which is an economic index of the average salary paid by a U.S. small business.
The Index now stands at 984, down from our May reading of 992. That's a one-month drop of 0.8 percent. That's the second small monthly decline we've seen this year and the lowest in the past five months, suggesting that salary drops may have finally started to decelerate in June.
Year to date, salaries are down 4.3 percent. The average small business annual paycheck in the United States is now $30,243. In June 2008, it was $32,386. Year over year, that equates to a 6.6% drop in salaries.
It's tough to find a job these days. It's even tougher to find a job that pays you what you used to earn in the past.
It's a Free Agent Nation
The June 2009 data suggest that small business owners continue to increase their reliance on independent contractors.
The economic index we generate to track this trend — the SurePayroll Contractor Index — represents the percentage of employed individuals who are working as independent contractors.
As of the end of June 2009, the Contractor Index now stands at 4.06 percent, up from 4.00 percent at the end of May.
This means that for every 100 workers engaged by small businesses in June, 4.06 are 1099 independent contractors and 95.94 are W-2 employees.
If you are struggling to find a new job, consider marketing yourself as an independent contractor. With luck, your contractor job will turn into a full-time position as the economy recovers.
Regional and State Performance
Three regions – the Midwest, Northeast, and South – experienced hiring growth in June. Hiring was down only in the West. On the compensation front, all four regions experienced salary declines in June.
Monthly hiring gains for the Midwest, Northeast, South and West were 0.4 percent, 0.5 percent, 0.3 percent and -0.3 percent, respectively.
As mentioned above, average salaries declined in all four regions last month. In the Midwest, Northeast, South and West, salaries changes were -0.9 percent, -0.9 percent, -0.6 percent and -0.2 percent, respectively.
With respect to year-to-date performance, hiring changes for the Midwest, Northeast, South and West are 2.9 percent, 4.0 percent, 2.5 percent and -1.2 percent, respectively. Year-to-date salary changes are -3.4 percent, -5.6 percent, -4.1 percent and -0.7 percent, respectively.
As depicted in the graphic below, year-to-date results vary by state. The Scorecard comprises data from all 50 states, but we pay close attention to states that we have earmarked as "benchmark states," specifically Arizona, California, Colorado, Florida, Georgia, Illinois, Indiana, Maryland, Minnesota, Nevada, New Jersey, New York, Oregon, Pennsylvania, Texas, Utah and Washington.
Data for our benchmark states are available — just send me an email requesting the data for your state.
I welcome any questions or suggestions regarding our Small Business Scorecard initiative. You may contact me at malter@surepayroll.com or by phone at 847676.8420 ext. 7229.
Best regards,
Michael Alter
President
SurePayroll, Inc.
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