According to Gusto’s real-time payroll data from more than 300,000 small and medium-sized businesses across the country, net jobs grew slightly faster last month compared to a year ago, and pay gains for newly hired workers were modestly positive.

  • In February, pay among newly hired workers was 1.8% higher than pay for those hired this time last year, led by increases in the index within Arts & Entertainment, Automotive, Non-Profits & Associations
  • SMB new jobs increased by 0.53% in February; this is up from 0.45% in February last year. The fastest-growing industries in January were Tourism, Sports & Recreation, and Automotive. 

This trend of a “wait and see” economy is generally in line with what we have seen over the past year. Continued economic uncertainty, along with rising costs, has led many SMBs to take a more cautious approach to hiring. However, net jobs still grew at a modest rate last month compared to a year ago, driven primarily by decreased terminations rather than increase in hiring. In fact, not only have we not seen any notable increase in layoffs – but the quit rate has also been declining over the past year as well – a signal that workers are setting into their current roles for longer periods of time.  

We will likely see this trend of modest employment and pay growth continue for the next few months, as SMBs are unlikely to break out of this waiting period until there is a material change in economic conditions. However, not all areas of the country are experiencing slow employment and wage growth. Businesses located in southern states are continuing to expand and pay more for new workers than they were a year ago. In fact, 9 out of the top 10 cities for both employment growth and Gusto’s New Hires Pay Index this month were located in southern states. 

Gusto’s New Hires Pay Index

Pay for newly hired workers on the Gusto platform increased 1.8% in February 2024, meaning businesses paid new workers 1.8% more than new hires last year, a sign of intensifying competition among employers looking for workers. 

Across sectors, net jobs increased by 0.53% in February 2024. This is up slightly compared to last February, when net jobs increased by 0.45%. While there was a slight drop in hiring over this time, we also saw a 0.3 percentage point decline in the quit rate as workers are now settling in for longer compared to a year ago. 

About the data

Gusto pay and hiring trends data is derived using Gusto’s real-time payroll data from over 300,000 small and medium-sized businesses across industries and across the country. New Hires Pay Index calculates the percent change in average annualized pay between workers hired in a given month and those hired one year earlier.

Interested in learning more about these trends? Contact us at [email protected]

Tom Bowen is an Economist at Gusto, researching work and business trends in the modern economy. He received his Master’s of Economics from UC Santa Cruz. Tom currently lives in San Francisco, CA.
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