This modest yet steady growth is strengthened by a solid increase in hours worked, which grew by 0.7 percent for the month or an 8.6 percent annual rate. Compensation also increased by 0.6 percent for the month, or a 7.6 percent annual rate.
Since the hiring trend began in October 2009, small businesses have created 715,000 jobs. The Index is based on figures from small businesses with fewer than 20 employees that use Intuit Online Payroll.
Based on these latest numbers, Intuit revised upward the previously reported growth rate for June to 0.3 percent from 0.2 percent, equating to 50,000 jobs added for the month.
“July’s small business data cheers me up,” said Susan Woodward, the economist who worked with Intuit to create the Index. “In addition to a steady hiring trend, there is now a solid increase in hours worked and compensation. This means that small business owners are busy, giving their existing employees more work and paying them slightly more.
At the same time, we see that the hiring rate is up and so is the fraction of hourly people working more than 140 hours per month. When we see the hiring rate go up with roughly the same growth in employment as in previous months, we can infer that people are leaving jobs in small business. This means that small businesses have to find new employees, which is a good sign for activity in the economy overall. The recovery is still slow, but these numbers, when viewed together, show that things are getting better, not worse.”
Strong Uptick in Hours Worked, Compensation
Small business hourly employees worked an average of 110.2 hours in July, making for a 25.4-hour workweek. This is a 0.7 percent increase from the revised June figure of 109.5 hours.
“This increase in hours worked is very good news and shows that small businesses have work to do,” Woodward said.
Average monthly pay for all small business employees was $2,682 per month in July. This is a 0.6 percent increase compared to the June revised estimate of $2,666 per month. The equivalent annual wages would be about $32,200 per year, which is part-time work for many small business employees. Roughly 65 percent of small business employees are hourly, and 30.3 percent of them worked more than 140 hours for the month in July, up from 30.1 percent in June.
“Compensation per employee is up,” said Woodward. “Through many months of this tepid recovery we saw essentially no movement in either total compensation per employee or the hourly wage. This movement coupled with the rise in employment and the hiring rate means that there is finally competition for workers.”
Small Business Employment by Geography
The Intuit Index also breaks down employment by census divisions and states across the country.
“For the most part, small business job growth continues across most of the country,” said Ginny Lee, senior vice president and general manager of Intuit’s Employee Management Solutions division. “While Maryland and the East South Central division continue to show a slight decline in employment, these changes are within the range of random variation and not particularly worrisome. In our data, we also see that hours worked are up across all divisions, another sign that times are getting better for many small businesses nationwide.”
