June 2023 SMB Hiring Insights: Hiring Softens While Layoffs Do Not Budge

While overall SMB job growth is starting off slower than last summer, the layoff rate has not budged over the past year, according to platform data from 300,000+ businesses. Firms in Leisure and Hospitality sector are growing faster and paying more for new workers than last year as well. Firms in Tourism and Sports & Recreation are notching the largest gains in Gusto’s New Hires Pay Index, a leading indicator of competition in the job market.

• In June, pay among newly hired workers was 6.7% lower than pay for those hired this time last year, led by decreases in the index within Education (-7.9%), Real Estate, (-6.0%), and Mining & Oil (-5.4%). Workers in Tourism (+13.0%), Sports & Recreation (+6.9%), and Salon & Spa (+6.9%) saw the fastest pay gains.
• SMB employment grew by 1.4% in June, down from 1.9% growth last June. The fastest-growing industries this month were Accommodations (+11.5%), Tourism (+4.0%), and Sports & Recreation (+3.7%).

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 slightly to -6.7% in June 2023, meaning businesses paid new workers a wage 6.7% less on average than new hires last year, a sign of continued easing of competition among employers looking for workers.

Hiring Trends

Across all sectors, SMB employment increased 1.4% in June 2023, compared to a 1.9% increase in June last year. Driving this change was a fall in the hiring rate, which fell from 4.2% to 3.6% over the past year. 

While the lower hiring rate indicates firms are less eager to expand compared to last year, the layoff rate has also ticked down slightly from 1.3% to 1.2% over the past year – a signal that firms are not looking to actively reduce staff.

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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