The SMB job market remains resilient heading into the summer, particularly in service industries expecting strong demand, according to platform data from 300,000+ businesses. Gusto’s New Hires Pay Index, a leading indicator of competition in the job market, leveled off at -6.5% in May 2023, and saw gains in Salon & Spa and Sports & Recreation.

  • In May 2023, pay among newly hired workers was 6.5% lower than pay for those hired this time last year, but large increases in the index were seen in Salon & Spa (+8.3%), Sports & Recreation (+8.0%), and Automotive sectors (+7.0%). The largest gains for new hire pay were in Richmond (+17.3%), Hartford (+16.7%), and Orlando (+11..2%).
  • SMB employment grew by 1.3% in May, slower than the 2.3% job growth seen last May. The fastest-growing industries in May were Accommodations (+13%), Sports & Recreation (+5%), and Tourism (+5%). Cleveland (+2.9%), Pittsburgh (+2.1%), and San Antonio (+2.1%) led the country in job growth in May.

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 -6.5% in May 2023, meaning businesses paid new workers 6.5% less than new hires last year, a sign of easing competition among employers looking for workers.

Hiring Trends

Across sectors, SMB employment increased 1.3% in May 2023, compared to a 2.3% increase in May of last year. Driving this change was a fall in the hiring rate, which ticked down from 7.6% to 6.4% over the past year. The layoff and dismissal rate remained low at 1.2%, within the narrow 0.9% to 1.3% historical average. 

While the drop in hiring indicates businesses are expanding at a slower pace than last year, low layoffs and dismissals are a positive sign that most companies aren’t looking to actively reduce staff size right now.

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]

Luke Pardue Luke Pardue was an Economist at Gusto, researching how public policies help small businesses and their workers thrive. He received his Ph.D. from the University of Maryland, where he studied the effects of government programs on disadvantaged populations’ housing and labor market outcomes.
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