Labor costs remain high for small businesses, but a report shows wage growth is slowing for some
Employee wages are one of the biggest costs for small businesses
NEW YORK — Employee wages are one of the biggest costs for small businesses.
A new survey found some owners may be seeing a bit of relief when it comes to wages. But while some say wage growth has stabilized or slowed, others note they haven't seen any moderation in their industries yet.
The Paychex Small Business Employment Watch found hourly earnings growth for workers at firms with 50 employees or less dropped to 2.89% in August. It's the first time growth has dropped below 3% since January 2021.
“After holding steady for several months, hourly earnings growth continued to decelerate in August,” said John Gibson, Paychex president and CEO. “Falling below three percent for the first time in three years is another notable signal that the labor market is moving closer to its pre-pandemic level.”
John Wilson, the owner of Wilson Plumbing and Heating in Akron, Ohio, with more than 150 employees, said labor costs are one of his biggest expenses, making up about 50%-70% of his budget. He said he's seen wages going up steadily over the years but he's seeing signs of stabilization — some recent job candidates have been more open to salary negotiations, for example.
“If labor costs aren’t managed well, it could disrupt the entire business," he said.
Albert Brenner owns a manufacturing business, Altraco, in Thousand Oaks, California. He said he hasn’t seen signs of a significant deceleration in wages yet. His top concerns right now are inflation, supply chain disruptions and the overall economy, but labor costs are one of his largest expenses.
“We are constantly balancing the need to offer competitive wages to retain skilled workers with the need to manage our
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