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.
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.
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