Human capital management company Paychex found that the rate of hourly earnings growth for workers at small businesses in the United States slowed 17 percent over the course of eighteen months. Nevertheless, hiring at small businesses across the nation remained stable, although slower than the rate of growth a year ago.

The survey found that wage growth continued to decline at the end of 2023, and small business employers continued to add jobs at a more moderate pace than at the start of the year, although still higher than pre-pandemic levels.

CEO John GIbson noted that small businesses continue to "show their resilience in the face of difficult capital markets and continued challenges in finding quality highly skilled labor.”

The survey found that hourly earnings growth fell to 3.48 percent and the rate of small business job growth declined 0.18 percent to 98.59. Other key findings included:

1. Hourly earnings growth in the Leisure and Hospitality sector steadily slowed during the past two years, declining from 10.95% to 3.79% between January 2022 and November 2023.
2. The South led the pace of small business job growth among regions for the 20th consecutive month, with an index of 99.36.
3. The Northeast (98.02) continued to rank last among regions and decreased 0.38%
4. Year-over-year weekly hours workers growth remained negative
5. The West led regional hourly earnings growth for six straight months
6. Washington led states for five consecutive months in hourly earnings growth
7. Miami led top U.S. metros in weekly hours worked for seven consecutive months
8. North Carolina was the top state for small business job growth, followed by Texas
9. Houston led top U.S. metros for small business job growth for a full year.
10. The Education and Health Services and Construction categories improved their small business employment growth rates.
11. The Leisure and Hospitality category continued a sharp deceleration

Gibson noted that the resiliency of the small business community has allowed them to meet the many challenges of 2023 and continue to grow, adding, "Wage inflation also continues to slow indicating that the actions taken by the Fed are having their desired effect on inflation. With a prolonged tight labor market challenging employers to find and retain qualified workers, policymakers should focus their efforts on increasing the participation rate and quality of the U.S. workforce. The Fed’s actions appear to be driving a soft landing as we’ve seen wage inflation normalize without negative impacts on job growth across the U.S."

"As we look ahead to 2024, small businesses will need to continue to show their resilience as they face many of the same challenges of 2023, such as retaining and attracting quality employees, accessing affordable growth capital, and navigating even more government regulations,” he added.

PayChex noted in its 2023 Year in Review that, nationally, small businesses experienced job growth for all of 2023, extending a streak of consistent job growth to 33 straight months.