Intuit, SurePayroll See Weak Economy

Little or no good news.

The numbers may vary, but SurePayroll and Intuit seem to agree that the state of the economy for small businesses and small business workers is, at best, weak.

“Small business hiring continued at the same rate as June, giving us two consecutive months of 0.2 percent nationwide hiring growth,” says SurePayroll Inc. president Michael Alter.

“The average paycheck, however, has leveled off,” he added. So far this year, small business hiring is up 4.1 percent — a 0.2 percent increase over June — while year-to-date pay decreased of 0.4 percent.

According to Intuit, small business employment grew slightly in July, but at a slower rate than in the past, while wages and hours worked by employees increased at a much faster pace, according to Intuit’s online payroll index.

The monthly report finds small business employment grew by 0.2 percent in July, equating to a 2.4 percent annual growth rate. The Index is based on figures from the country’s smallest businesses that use Intuit .

This translates to approximately 40,000 new jobs nationwide in July, a decrease from June’s revised estimate of 45,000 jobs. Since the growth trend began in October 2009, small business jobs have increased by 330,000.

The Index’s new geographical measurement also revealed that small business employment is slightly up across most of the country. Although the pace of job growth slowed in July, both wages and hours worked increased by 0.7 and 0.9 percent respectively.

The Intuit Small Business Employment Index shows increasing employment since October 2009, reversing a downward trend that dates back to 2007. The employment index reflects data from approximately 62,000 small business employers who use Intuit Online Payroll. The month-to-month changes are seasonally adjusted and informative about the overall economy. The National Employment Index is from the Bureau of Labor Statistics.

“While employment is up this month, it is, like last month, up less than the month before,” said Susan Woodward, the nationally recognized economist who worked with Intuit to create the Index. “While this slower growth rate is disheartening, the news is not all bad. Both compensation and hours worked are dramatically up, while employment is slightly up across most of the country. These latter signs indicate a continued general recovery despite slowing growth in employment.”

Substantial Increases in Compensation, Hours Worked

The data shows that workers made more money and worked longer hours. Compensation grew by 0.7 percent in July to $2,624 per month, up from a revised estimate of $2,606 per month in June.

Monthly hours worked also increased significantly by 0.9 percent in July to 109.1 hours, compared to a revised estimate of 108.2 hours in June. This translates to wages of about $31,500 per year for all employees, and a 25.2-hour work week for hourly employees.

“This is a big increase for compensation which, on an annual basis, would be nearly 10 percent per year,” Woodward said. “With inflation running so low, this is a substantial increase in real compensation. The increase in hours worked is also large –more than 10 percent if carried out over an entire year. It appears that small businesses are busy, and need additional help, but are asking their existing people to work more hours rather than hiring more people.”

Small Business Employee Monthly Compensation for all employees shows compensation rising in July 2010, a trend that started late last summer. This data includes the compensation paid by small business owners to themselves. The levels reflect data from approximately 253,000 employees of the Intuit Online Payroll customer set of 62,000 businesses, and are not necessarily representative of all small business employees. The month-to-month changes are seasonally adjusted and informative about the overall economy.

Small Business Employee Monthly Hours Worked for hourly employees increased in July 2010 by 0.9 percent, showing an upward trend that began late last summer. The levels reflect data from approximately 159,000 hourly employees of the Intuit Online Payroll customer set of approximately 62,000 businesses, and are not necessarily representative of all small businesses. However, the month-to-month changes reflect the results of federal employment data for small businesses during corresponding times, leading to the conclusion that they are informative about the overall economy.

Small Business Employment by Geography

The latest installment of the Intuit report also breaks down employment by divisions across the country. Mountain states saw the largest increase by percentage, followed by the South Atlantic and Pacific Coast. For the states in which the Index has more than 1,000 small firms represented, Maryland saw the greatest growth while New Jersey is the only state that saw a slight decrease in employment.

“Providing small business employment data by geography paints a clearer picture of where growth is occurring,” said Cameron Schmidt, vice president of Intuit’s small business payroll business. “It’s good to see a slight increase in employment growth for July in most parts of the country.”

Small Business Employment by U.S. Census Division is up across most of the country except for the upper Midwest, which is slightly down. The data reflects employment from approximately 62,000 small business employers who use Intuit Online Payroll. The month-to-month changes are seasonally-adjusted and informative about the overall economy.

Posted on August 2, 2010