Payroll company Paychex reported Tuesday that small businesses with fewer than 50 employees continued to add jobs in June, but at a slower pace, though wage growth remained steady.
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In terms of employment, California fell to the bottom of states in June, reporting an index level below 100 for the third consecutive month, indicating a decline in employment compared to a year ago, mainly due to a decline in the leisure and hospitality sector.
The National Employment Index showed employment continued to grow in June (100.29), but at a slower pace than May (100.58) and June 2023 (101.37).
“Employment is still growing, but it's clearly slowing,” said Frank Fiorill, vice president of risk, compliance and data analytics at Paychex. “Wages continue to show weakness. Some of the actions the Fed has taken on interest rates are definitely impacting that as well.”
“California ranked last in this month's index,” he continued, “as did most of California's major cities. Drilling down further, one of the key sectors, leisure and hospitality, ranked last in California.”
The nation's two largest industry sectors, education and health services (102.18) and professional and business services (100.20), saw small business employment growth increase in June from the previous month.
Fiorillo believes that small businesses like restaurant franchises are partly to blame for recent regulations mandating minimum wages and paid vacations. He sees the impact on accountants and their small business clients as follows:
“The courts will have more power than some government agencies going forward,” he said. “What impact will that have on the way government agencies guide and regulate? Will there be less regulation? Will the competitive environment for small businesses become much tougher for small businesses? With the election approaching, the government is trying to push legislation through. There are a lot of things we are watching closely, and accountants should too.”