Small businesses created 35,000 new jobs in August, but employees worked fewer hours and received less money, key findings among the results of this month's update of the Intuit Small Business Employment Index, covering the period between July 24 and Aug. 23. The monthly report found that small business employment grew by 0.18 percent in August, equating to an annual growth rate of 2.2 percent. Hours worked and compensation decreased by 0.3 percent and 0.08 percent respectively, according to the company, which provides business and financial management solutions for small to medium-size businesses (SMBs).
Since the hiring trend began in October 2009, small businesses have created 540,000 new jobs. The Index is based on figures from small businesses with fewer than 20 employees that use Intuit Online Payroll. Based on these latest numbers and revised national employment data from the Bureau of Labor Statistics, Intuit revised slightly downward the previously reported growth rate for July to 0.21 percent from 0.24 percent. This equates to 40,000 jobs added in July.
"There was plenty of bad news this month and the Intuit small business employment figures show this," said Susan Woodward, the economist who worked with Intuit to create the Index. "While employment rose overall, and increased in most of the regions and states that we report on, there are other signs that the small business labor market is weak."
Small business hourly employees worked an average of 108 hours in August, making for a 24.9-hour workweek. This is a 0.3 percent decrease from the revised July figure of 108.3 hours. Average monthly pay for all small business employees was $2,649 per month in August. This is a 0.08 percent decrease compared to the July revised estimate of $2,651 per month. The equivalent annual wages would be about $31,800 per year, which is part-time work for many small business employees.
"Compensation and hours worked fell-which is the opposite of what we reported in July. From this month's numbers, we don't see a new recession, but we don't see a robust recovery either. The labor market for smaller businesses is still soft," Woodward added. "With a soft labor market, employers no longer have to pay more to get help."
Intuit reports data for three categories: small business employment, compensation and hours worked. Intuit analyzes and publishes the data at the beginning of each month. The Index also includes employment data broken down by geography. As with the government data, there may be revisions to the Intuit Index numbers. These revisions are partly due to calculations using the latest month of new Intuit data.
The company noted these calculations include recomputing seasonal factors and the moving average process used to obtain the curve, which can change the values for previously reported months. Changes to the data are also due to revisions to the government employment data, which is used to calculate the Intuit Index.