After declining every month since August of last year, in January hiring among SMBs bounced back a whole percentage point from 4% to 5.1% compared to last month. However, net employment for SMBs still declined slightly in January due to a similarly large increase in quits. While some of this increase in quits can be attributed to the end of seasonal holiday employment, in general, significant increases in the quit rate signal workers are feeling more confident in their ability to find better work opportunities. Indeed, in January, Gusto’s New Hires Pay Index rose 1.2%, indicating that competition for workers is starting to pick up again after easing for most of last year.
- In January, pay among newly hired workers was 1.2% higher than pay for those hired this time last year, led by increases in the index within Arts & Entertainment, Tourism, and Automotive.
- SMB employment fell by 0.15% in January, mostly unchanged since January last year. The fastest-growing industries in January were Accounting, Insurance, and Healthcare & Social Assistance.
Gusto’s New Hires Pay Index
Gusto’s New Hires Pay Index tracks business competition for workers in real time. It’s the change in wages paid to employees hired over the past three months compared to a year ago. This index rose to 1.2% in January 2024, meaning businesses paid new workers 1.2% more than new hires last year, a sign of intensifying competition among employers looking for workers.
Across sectors, SMB employment decreased 0.15% in January 2024. This is mostly unchanged since last January, when SMB employment decreased by 0.1%. Driving this slight decrease in employment was a decline in both hiring and layoffs over the past year.
Despite a significant jump in SMB hiring rates last month, hiring is still slightly down from last year, from 5.3% in January 2023 to 5.1% in January 2024. In addition, layoffs have declined slightly over the past year. Low layoffs and firings are a positive sign that companies aren’t looking to let go of workers ahead of a possible downturn.
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 hourly earnings between workers hired in over the last three months and those hired the 12 to 15 months prior.
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