US Small Business Job Growth Rate Holds Pace in May After Surge in April

Julija A. Image
ByJulija A.
June 03,2021

The US job growth rate remained largely unchanged in May, based on payroll data provided by approximately 350,000 Paychex clients. The Paychex | IHS Markit Small Business Employment Watch May report reveals that the Small Business Jobs Index has experienced a slight decrease, slowing 0.07% month-on-month. Additionally, as a result of part-time and hourly workers with lower wages reentering the workforce, weekly earnings growth fell below 3%.

“Small businesses are struggling to return to normal operations and expand due to labor shortages,” said IHS Markit’s chief regional economist, James Diffley, and added that the Small Business Jobs Index held steady in May.

Hiring challenges are still present nationwide. Job growth decline in the construction industry has significantly affected the positive momentum seen over the last few months, according to Martin Mucci, Paychex’s CEO and president. Mucci also added that the low availability and high cost of building materials dragged the construction job growth down by 1.78% in May.

On the other hand, with more people dining out and going on vacations across the United States, both job growth and wages in the industries of leisure and hospitality have rebounded significantly. These sectors have gained 1.94% in May and 12.4% during the past quarter.

The May report also reveals that the national index has gone up 4.58% over Q1 2021, driven mainly by the lower employment comparison level the economy saw last year. Overall, the national index has managed to bounce back to prepandemic levels, even though early 2020 data indicated small business job growth had slightly declined since 2017.

With Texas claiming the top ranking among states for job growth rates, the South of the country has remained a clear leader of all regions in small business job growth. Meanwhile, the West was the only region with positive gains in May and has improved for the third month in a row. Additionally, for the first time since 2019, the West has overtaken the Midwest and become the runner-up among US regions.

About the author

Julia A. is a writer at SmallBizGenius.net. With experience in both finance and marketing industries, she enjoys staying up to date with the current economic affairs and writing opinion pieces on the state of small businesses in America. As an avid reader, she spends most of her time poring over history books, fantasy novels, and old classics. Tech, finance, and marketing are her passions, and she’s a frequent contributor at various small business blogs.

More News

NASA continues its tradition of supporting US entrepreneurs in developing tech innovations ready for commercial use. NASA’s Small Business Innovation Research (SBIR) program continues that pursuit with its latest set of 140 Phase II rewards for 127 small businesses. A total of $105 million in funding will be awarded to businesses located in 34 different US states and Washington, DC. The program aims to find the most practical technologies for the National Space Agency and the commercial marketplace while including diverse entrepreneurs. Among the companies listed in Phase II funding, there are 33 businesses owned by women, minorities, and veterans. For example, the Salt Lake City-based company, InnoSys Inc., is a woman-owned small business developing a solution for operating cameras in harsh, extremely high-temperature environments. The innovation from InnoSys has both space mission applications and provides a means of imaging fires, inspecting nuclear reactor cores, or furnaces operating at high temperatures. With NASA’s assistance, InnoSys can focus on commercializing its product. If Phase II proves successful, the agency can provide further funding to find potential customers besides NASA. “The Phase II contract period is an exciting time, as small businesses put their ideas into practice and develop prototypes attractive to NASA and private investors. The selected technologies have displayed great potential impacts for their respective sectors, and we are proud to continually invest in today’s booming aerospace economy through these small businesses,” Jason L. Kessler, a NASA SBIR Program executive, stated. Some of the other exciting projects include a compact heat exchanger for possible electrified aircraft propulsion, an AI-powered virtual medical expert, and many others.  Working on innovative tech is a demanding process, and our team recommends small businesses use cloud storage services to better coordinate product research and development. After all, a promising small business needs every advantage to secure funding from organizations such as NASA.
By Milja · May 21,2021
Less than 3% of approximately 30 million small-business owners in the US could be impacted by President Joe Biden’s tax increase under the jobs and infrastructure plan.The tax rate increase from 21% to 28% will not affect small businesses organized as “passthrough” enterprises. Limited liability companies are the biggest representatives of passthrough entities, and also account for nearly all small businesses. Therefore, most of them will avoid this hike.What’s more, most small-business owners are single earners. Out of that group, the only ones who will feel the proposed increase are people and married couples with more than $452,700 and $509,300 in annual income, respectively.This potential result is in line with the goal of the new corporate tax rate. After all, President Biden is counting on the support of small-business owners in this matter, as the actual target of this plan is large corporations. The White House seeks to increase the corporate tax rate by 7% to 28%, which would be significant primarily for large corporations like Amazon and Walmart. National trade groups, like the Business Roundtable and the US Chamber of Commerce, are vehemently opposed to the proposed change.According to a White House official, the tax plan should help eliminate the practice of offshoring profits and jobs while paying lower taxes than small businesses, present at many multinational corporations.Republican lawmakers are opposed to the proposal and remain unmoved by the small-business plight. The official White House stance is one open to compromise. According to the official, President Biden “was in the Senate for almost 40 years and understands how the legislative process works, and there is going to be a little bit of give and take with Congress, so that's the part of the process we are in right now.”Even though tax changes won’t impact most small businesses, these business owners will still need to stay on top of their tax obligations. They can do so by using tax software to automate the preparation process and meet filing deadlines.
By Milja · May 21,2021
Unemployed Americans could lose their unemployment aid come this June, two months earlier than initially planned. The announcement comes as a shock for thousands who lost their jobs during the novel coronavirus pandemic. Jobless Americans were supposed to receive monetary aid until Sept. 4, 2021, through the federal unemployment program, but several US states have decided to cut the program by two months. At the moment, the shortened federal aid program is set in motion in Arkansas, Montana, Mississippi, and South Caroline. “Continuing these programs until the planned expiration date of Sept. 4, 2021, is not necessary and actually interferes with the ability of employers to fill over 40,000 job vacancies in Arkansas,” wrote Arkansas Gov. Asa Hutchinson in a letter. Hutchinson added that the current unemployment benefits stop people from taking on new jobs and that the current unemployment rate is just 0.6% under the pre-pandemic rates. In his words, the government aid to jobless people in Arkansas is causing a labor shortage. While this won’t mean an end to all unemployment benefits, it will certainly cause a drastic drop in many people’s income. Specifically, it would mean that jobless citizens of Arkansas will then receive $248 a week, while the weekly check in Mississippi will be $195. The decision was met with a lot of opposition, with the loudest opponents claiming it’ll set America for a wave of family hardship. It will affect not just people who lost their jobs but also self-employed, freelancers, and gig workers who, according to the gig economy statistics, make up 36% of US workers and were already having a rough time throughout the pandemic. Small business owners in many towns had to close their shops, either for good or temporarily, until the business could pick up, saying that the government unemployment checks helped them through this turbulent period. “We’re looking at a tsunami of debt, evictions, and food insecurity on the horizon, and it’s mostly women and people of color who will bear the brunt of that,” said Rebecca Dixon, executive director of the National Employment Law Project. Dixon believes the decision is shortsighted and potentially dangerous.
By Julija A. · May 14,2021

Leave your comment

Your email address will not be published.


There are no comments yet