Small Businesses Add 38,000 Jobs as Pay Rises 3.9%: October 2026 Gusto Small Business Jobs and Pay Report

Key Takeaways

• October extended the streak of small business job gains to nine straight months. At +38,000, hiring picked up for a second straight month and came in above the 12-month average of +34,000.

• Average hourly earnings were up 3.9% year-over-year to $37.50 an hour, and starting pay for new hires rose 3.0% to $25.90 an hour.

• Gains were broad across sectors. 16 of 19 sectors added jobs, in line with the typical month this year, and every region and every company size tier posted gains.

• Larger small businesses added the most jobs. Companies with 20–49 employees added +15,000 net jobs, more than any other size tier, after businesses with 5–9 employees led in August and September.

October was a strong month for small business job growth, with America’s small businesses adding an estimated +38,000 net new jobs on a seasonally adjusted basis. October’s gain marks the ninth consecutive month of positive net hiring following January’s dip, and the second month of increasing gains, lifting hiring above the 12-month average.

Hiring was broad across sectors, region, and business size. Health care and social assistance led all sectors for the ninth straight month with +13,000 net hires, followed by professional, scientific, and technical services (+5,500) and construction (+3,800). 16 of 19 sectors posted positive net hires. All four U.S. regions added jobs, led by the South at +13,000, and every company size tier stayed in positive territory.

Pay kept climbing. Average Hourly Earnings, the average wage across small business employees, reached $37.50 an hour in October, up 3.9% from one year earlier, and starting pay for newly hired workers was up 3.0% from last year.

The Gusto Small Business Jobs and Pay Report provides a real-time view of hiring and pay among U.S. small businesses on Gusto. All figures are based on anonymized payroll data and are statistically weighted to be nationally representative by size, industry, region, and company age. 

The Big Picture

At +38,000, October’s seasonally adjusted net hires came in above the 12-month average of +34,000. Here’s how the month compares to the recent trend:

• June 2026: +36,000 net hires

• July 2026: +40,000 net hires

• August 2026: +25,000 net hires

• September 2026: +27,000 net hires

October’s gain was the largest since July, after a softer couple of months. Hiring is still well below its pace earlier in the year, when small businesses added about +64,000 net jobs a month from February through April.

On pay, Average Hourly Earnings reached $37.50 in October, up 3.9% from a year earlier. Year-over-year small business wage growth has hovered around 4% for much of 2026, ranging from about 3.9% to 4.6%, and was little changed from September’s 4.0%.

New hires are seeing increases too: the New Hire Pay Index was up 3.0% year over year, to about $25.90 an hour. Explore the live pay charts on Gusto’s Real-Time Economic Data page.

Prior months were revised with this release. Compared with last month’s report, September was revised down to +27,000 (from +28,000), and August was revised up to +25,000 (from +18,000). As always, the most recent months are subject to revision as additional payroll data arrives.

Sector Breakdown

Health Care and Social Assistance led all sectors for the ninth straight month with +13,000 net hires, followed by Professional, Scientific, and Technical Services (+5,500) and Construction (+3,800). Only three sectors shed jobs, and each by fewer than 300: mining, accommodation and food services, and management of companies.

Regional Breakdown

All four U.S. regions posted positive net hires in October. The South led for the ninth straight month at +13,000 net hires, followed by the Midwest at +9,400, the Northeast at +8,200, and the West at +7,000.

As for pay, the West led pay growth at 5.0% year over year in October, and it also has the highest average hourly earnings of any region at $42.00. The South grew at about the national rate of 3.9%, and the Northeast (3.8%) came in just below it. The Midwest trailed with 3.2% growth, and its average hourly earnings of $33.00 are the lowest of the four regions.

Company Size Breakdown

All four company size tiers posted positive net hires in October. Businesses with 20–49 employees led at +15,000, back on top after the 5–9 employee tier led in August and September. The 5–9 tier followed at +12,000, then the 10–19 tier (+7,900) and the smallest 1–4 employee businesses (+3,600).

Methodology

The Gusto Small Business Jobs and Pay Report tracks anonymized payroll data from a stratified random sample of roughly 100,000 small businesses across the United States with 1–49 employees, drawn from the 500,000+ companies on Gusto. All figures in this report are seasonally adjusted unless otherwise noted.

To ensure the findings represent small businesses across the United States, Gusto uses a two-stage weighting process. First, we randomly select a representative sample of companies (roughly 100,000 businesses annually) that match the national distribution of small businesses by industry, company size, and geographic region, using U.S. Bureau of Labor Statistics “Quarterly Census of Employment and Wages” data as a benchmark. Second, we adjust the sample to reflect the national distribution of company ages based on data from the Census Bureau’s “Business Dynamics Statistics.”

This report provides three key hiring metrics for small businesses each month: Hires (new employees starting work), terminations (employees leaving for any reason), and net hires (the difference between hires and terminations, showing whether small businesses are creating or losing jobs overall). All data are seasonally adjusted using the U.S. Census Bureau’s X-13ARIMA-SEATS methodology.

We also track two small business pay measures: Average Hourly Earnings and the New Hire Pay Index (the average starting wage for newly hired workers, reported as a three-month rolling average). Both are seasonally adjusted.