U.S. Small Business Job Growth Holds Steady in May

Hourly earnings growth reaches new four-year low.

In May, job growth in U.S. small businesses remained largely unchanged from April, according to the Paychex Small Business Employment Watch. The Small Business Jobs Index, which is a primary component of Paychex’s monthly employment report for businesses with fewer than 50 employees, has continued to show steady, flat employment growth throughout 2025. Meanwhile, hourly earnings growth for U.S. small business workers reached a four-year low at 2.77% in May. “Despite the rapidly changing news cycle, the underlying labor market remains fundamentally healthy, and small business owners have remained resilient,” said John Gibson, Paychex president and CEO. “While inflation concerns remain for business owners, wage inflation in small businesses continued to moderate and reached a new four-year low in May.” HR Technology Insights: Oyster’s 2025 Report: Expertise Economy Transforms Hiring

Jobs Index and Wage Data Highlights

• At 99.81 in May, the national Small Business Jobs Index continued to report steady, flat employment growth in 2025.
• National hourly earnings growth (2.77%) for small business workers continued its slow descent to a new four-year low (May 2021: 2.74%).
• Three-month annualized hourly earnings growth (2.45%) fell to its lowest level since December 2020 (1.66%).
• The Midwest (100.19) has represented the strongest region for small business employment growth for the past year, while the West continues to lag all regions and reported an index level below 100 for the 14th consecutive month in May.
• Construction dropped 0.68 percentage points to a jobs index of 99.69 in May, marking its lowest level since March 2021. Job growth in the Leisure and Hospitality industry remained last among sectors for the fourth consecutive month at 98.18 in May.

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