After gaining src95,000 jobs in December 2022, small businesses have seen a decline in jobs in January (a loss of 75,000) and February (a loss of 6src,000)
Overall, private sector employment increased by 242,000 jobs in February, according to the February ADP® National Employment ReportTM produced by the ADP Research Institute® in collaboration with the Stanford Digital Economy Lab (“Stanford Lab”).
ADP Chief Ecnomist Nela Richardson said that small businesses were in a “challenging environment” and struggling to compete with medium and large businesses.
ADP Small Business Jobs Report – February 2023Richardson said that medium and large businesses are reluctant to let go of workers. Small businesses aren’t financially able to match their salaries and any perks that are part of employment.
“Therein lie some of the challenges,” Richardson said. “In general, you need a little bit of slack. With the 3.4% unemployment rate, there’s not a lot (of employees) in the pipeline for small businesses to capture.”
Richardson also noted that when surveyed, small business owners cite “finding qualified employees” as the biggest challenge they are facing.
Small Business BreakdownIn February, small businesses lost 6src,000 jobs. Businesses of src-src9 employees lost 56,000 jobs, and businesses from 20-49 employees lost 5,000 jobs.
During that time, the median annual pay rate for businesses of src-src9 employees was at 5.5%. The median annual pay rate for businesses from 20-49 employees – and also for medium and large businesses, was at 7% or higher.
“There is a tradeoff in the labor market right now,” said Nela Richardson, chief economist, ADP. “We’re seeing robust hiring, which is good for the economy and workers, but pay growth is still quite elevated. The modest slowdown in pay increases, on its own, is unlikely to drive down inflation rapidly in the near-term.”
Jobs ReportPrivate employers added 242,000 jobs in February. Medium businesses added src48,000 jobs and large businesses added src60,000 jobs. Small businesses lost 6src,000 jobs.
Construction Sector Job LossesThe construction business lost src6,000 jobs during February. Richardson described the job loss as “noticeably negative” and said that the industry is “interest rate sensitive.”
The higher interest rates for mortgages reduce the number of consumers who can afford to buy new homes.
Pay InsightsPay growth slowed in February. Pay growth for job stayers slowed to 7.2 percent in February, the slowest pace of gains in src2 months. Pay growth decelerated for job changers, too, falling to src4.3 percent from src4.9 percent.
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