Small businesses created 50,000 new jobs in January but paid employees less and gave them fewer hours. The East Coast, especially New York, showed more weakness in employment than in other parts of the country.
These are among the results of January's update of the Intuit Inc. (Nasdaq: INTU) Small Business Employment Index, covering the period between December 24, 2011, and January 23, 2012. The monthly report found that small business employment grew by 0.2 percent in January, equating to an annual growth rate of 2.9 percent. Average monthly hours worked decreased slightly by 0.05 percent, or six minutes, while average monthly compensation also decreased slightly by 0.1 percent, or $3. The index is based on figures from small businesses with fewer than twenty employees that use Intuit Online Payroll.
"Overall, the small business labor market is not weak, but not strong either", said Susan Woodward, the economist who worked with Intuit to create the index. "Small business employment continues to rise but at a rate that will not get us back to full employment very quickly. Overall, non-salaried employees saw their hours and compensation decrease slightly, but so did the price level. When adjusted for inflation, compensation is about flat. The percentage of non-salaried people working full time is also down slightly, a trend that began in March 2011."
Based on January's numbers and revised national employment data from the Bureau of Labor Statistics, Intuit revised upward the previously reported December growth rate to 0.3 percent. This equates to 60,000 jobs added in December, up from a previously reported 55,000 jobs.
Slight Decreases in Hours Worked and Compensation
Small business hourly employees worked an average of 107.5 hours in January, a slight decrease from 107.6 hours in December, making for a 24.8-hour workweek. Average monthly pay for all small business employees decreased slightly to $2,632 in January, down 0.1 percent from the December revised estimate of $2,635 per month. The equivalent annual wages would be about $31,600 per year, which is part-time work for many small business employees.
Small Business Employment by Geography
The Intuit index shows employment growth in all census divisions, except for New England, and in many states for which the index tracks, except for New York and Maryland.
"The geographical pattern of labor market indicators shows more weakness in employment on the East Coast, especially the New York region where there are more financial service businesses", said Woodward. "This suggests that the continuing uncertainty regarding the euro and the debts of the European sovereign nations are a force in economic activity here. We hear this on the news, and we can see it in the small business figures."
|US Census Division||Percent Change in Employment|
|East North Central||0.03%|
|West North Central||0.16%|
|East South Central||0.3%|
|West South Central||0.5%|
|State||Percent Change in Employment|
Small Business Employment by State is up for most states in which Intuit Online Payroll has more than 1,000 small business firms represented. The month-to-month changes are seasonally adjusted and informative about the overall economy.