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.
Those were among the findings included in the latest Intuit Inc. (Nasdaq: INTU) Small Business Employment Index. The monthly report, which now includes a geographical breakdown on hiring trends, found that 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 Online Payroll.
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.
State – Percent Change in Employment
Arizona – 0.3 %
California – 0.3 %
Florida – 0.2 %
Georgia – .3 %
Illinois – 0.1 %
Maryland – 0.5 %
Massachusetts – 0.4 %
New Jersey – -0.3 %
New York – 0.1 %
North Carolina – 0.4 %
Texas – 0.1 %
Virginia – 0.4 %
Washington – 0.3 %
Small Business Employment by State is up for many states across the country with Maryland seeing the highest growth. The states above reflect those for 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.
About the Index
The Intuit Small Business Employment Index is based on aggregate and anonymous online employment data from approximately 62,000 small business employers each with fewer than 20 employees. These small businesses use Intuit Online Payroll from Intuit, the No. 1 provider of payroll software with more than 1 million customers. These smallest employers are important to the economy as they comprise 87 percent of the total U.S. private employer base and employ nearly 20 million people. More information is available at intuitinc.com/payrollindex.
Intuit reports data for three categories: small business employment, compensation and hours worked. Intuit will analyze and publish 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. These calculations include re-computing 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.
While the Intuit Small Business Employment Index offers macroeconomic insight about the economy generally, it does not indicate or represent changes in Intuit's business results for any period.
The Index data reflects monthly employment activity in small businesses, and is adjusted to account for changes in Intuit's Online Payroll customer base. The percent change is measured monthly using the change in employment for existing Intuit Online Payroll customers from one month to the next. The set of customers changes each month so the measurement is the change, for each pair of months, for customers who are present in both the earlier and the later month.
About Intuit, Inc.
Intuit, Inc. (intuit.com) is a leading provider of business and financial management solutions for small and mid-sized businesses; financial institutions, including banks and credit unions; consumers and accounting professionals. Its flagship products and services, including QuickBooks®, Quicken® and TurboTax®, simplify small business management and payroll processing, personal finance, and tax preparation and filing. ProSeries® and Lacerte® are Intuit's leading tax preparation offerings for professional accountants. Intuit Financial Services provides enhanced online banking solutions and unique insights to help banks and credit unions serve businesses and consumers with innovative solutions.
Founded in 1983, Intuit had annual revenue of $3.1 billion in its fiscal year 2009. The company has approximately 7,800 employees with major offices in the United States, Canada, the United Kingdom, India and other locations.
Intuit and the Intuit logo, among others, are registered trademarks and/or registered service marks of Intuit Inc. in the United States and other countries. Intuit Small Business Payroll Index is copyrighted by Intuit. Its contents may not be resold or modified in any way. It can be linked to and referenced with the following attribution: "Intuit Small Business Employment Index © Intuit Inc. All rights reserved."