The Phoenix metro fared the best among major U.S. metro areas in small business hiring for January 2020, according to the Paychex IHS Markit Small Business Employment Watch. Click
here for a larger view of the chart.
By Eric Jay Toll for PhxNewsroom
Although Phoenix was at the top of the list of top 20 metros for small business job change, the market still hit negative numbers for the second month in a row. The Phoenix small business hiring index, 99.84, was the best among the metros, but all 20 markets were showing negative small business job growth.
Small business wages in the Phoenix-Mesa-Chandler metro rose more than 1.8 percent to $27.14 per hour compared to a year earlier. That ranked 15th among the top 20 metro areas. San Francisco and Los Angeles topped the wage list with year-over-year wage increases of more than 4 percent. San Francisco's small business wages are now at $35/37 per hour and L.A. is $30.34.
Los Angeles and San Francisco, along with Seattle, Riverside, New York and San Diego, were among the metros with the largest small business job losses. Except for Riverside and Seattle, the same markets were among those with the highest small business wage increases. On the flip side of those data, Phoenix, Dallas and Houston, which had lower wage increases, showed better hiring performance.
The January report from Paychex is the fourth month in a row that national small business hiring has been showing negative numbers.
Small businesses are crucial to the Phoenix area. Companies with fewer than 100 employees comprise more than 97 percent of the businesses in Maricopa and Pinal counties, the two counties comprising the metro area.
“Small business hiring is a good economic conditions indicator,” said Jim Rounds, president of the Rounds Consulting Group. “With the number of small companies in the Valley, it’s important to watch the hiring trends in small business. Their workforce is larger than the large companies.”
In a reflection of the growing national trend towards increased minimum wages, leisure and hospitality had the highest wage year-over-year percentage increase, 5.1 percent. Reflecting a huge demand for skilled workers and increased hiring nationally, manufacturing was second on the list with a 3.6 percent increase. However, the average manufacturing wage is $27.69 per hour nationally and $17.90 hourly in leisure and hospitality. Third on the list was trade, transportation and utilities, $25.57 per hour nationally, where wages gained 3.4 percent in year-over-year comparisons.
The trade sector, which includes logistics and distributions, had strong job gains in Phoenix during December 2019. January 2020 metro area employment figures hit the street in early March.
Across the nation, “other” services led sectors in hiring, followed by healthcare and then construction. In December, business services, construction and health care were the strongest hiring sectors in .the Phoenix metro.
Small business manufacturing hiring showed a decline nationally, but in Phoenix, the sector has reported 39 consecutive months of increased hiring. It has been one of the more robust hiring sectors, according to the Arizona Economic Opportunity Office.
At the state level, Tennessee and Arizona were the only states reporting net gains in small business hiring. Tennessee’s index at 101.4 was highest in the nation.
Arizona’s 100.8 index shows just minor job gain in small business hiring. All other states reported job losses. Texas ranked third among states, but still showed a slight loss of small business jobs.
Arizona and Texas came in dead last among states for year-over-year wage gains at the state level. Statewide, Arizona wages rose 1.8 percent to $26.08 per hour. Texas clocked a 1.5 percent gain to $26.82 per hour.
New York (4.1 percent) and California (4.0 percent) have the biggest year-over-year small business wage gains. Among all states, Washington and Massachusetts have the highest average wages, both over $31 per hour. California, Illinois and Virginia average over $30 per hour for small business wages. Arizona is in the middle of the pack.
