SMB owners remain focused on retaining their current staff through pay increases rather than adding new hires, according to platform data from 300,000+ businesses. Gusto’s New Hires Pay Index, a leading indicator of competition in the job market, fell by 3.5% in March 2023, a sign that the job market continues to cool amid rising economic uncertainty.
- In March, pay among newly hired workers was 7.5% lower than pay for those hired last year, led by decreases in the index within Insurance (-9%), Real Estate (-8%), and Finance (-5%).
- SMB employment grew by 0.5% in March, below the 1.8% increase this time last year. Fastest-growing industries in March were Tourism (+5%), Accommodations (4%), and Facilities (+3%).
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 this month compared to a year ago. This index fell to -3.5% in March 2022, meaning businesses paid new workers [3.5]% [less] than new hires last year, a sign of [easing/intensifying] competition among employers looking market for employees.
Across sectors, SMB employment increased 0.5% in March 2023, compared to a 1.8% increase in March last year. Driving this change was an uptick in the hiring rate, which fell from 6.9% to 5.6% over the past year.
Low layoffs and firings are a positive sign that companies aren’t looking to let go of workers ahead of downturns.
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.