Have you ever thought about how small firms handle salary rises in this competitive job market?
Despite recent claims that U.S. worker productivity has declined sharply in 2022 and internet, media, and e-commerce businesses are shedding workers in widescale layoffs, the overall employment market remains solid.
As a result, workers appear to have the upper hand in the economy, ready to abandon their positions and hunt for new ones at any time, knowing that opportunities outnumber candidates.
According to the Small Business Administration, more than 6 million American small enterprises employed at least one employee in 2021. Small firms have created 62% of new jobs since 1995. The way small businesses treat their employees is more crucial than ever, as any decrease in worker satisfaction may result in another resignation letter.
Pay is naturally one of the top concerns for job seekers, whether they want to keep up with inflationary increases or find an opportunity to push for a pay raise; thus, the size of raises organizations provide their employees is essential.
Swyft Filings reviewed data from the National Federation of Independent Business, Paychex, and IHS Markit to assess how small enterprises in this labor market manage pay raises. The NFIB data came from surveys of small business owners, while the Paychex and IHS Markit data came from aggregated payroll information from Paychex clients.
Following that drop, employees at small businesses saw their hourly salaries rise, as did the number of hours they worked. However, labor hours began to reduce in late 2020 and continued to fall through 2021. Earnings and work hours are expected to rise again in 2022, with weekly earnings for small business employees.
Since November 2021, the unemployment rate in the United States has been at 4.2% or lower, putting pressure on firms to raise pay to retain and recruit workers.
According to a Gallup poll in 2022, 64% of employees cited wages and perks as important criteria for selecting a new job.
Not all industries pay the same salary. Based on NFIB data, the percentage of employers expecting to increase compensation between October 2022 and December 2022 is at December 2019 levels and is heading downward.
Furthermore, the NFIB’s most recent survey confirmed that impression. Almost 59% of small business owners anticipate maintaining employee pay the same from November 2022 to January 2023.
Given that 64% of these respondents predict their sales volume to remain unchanged or slightly decrease during the same period, this may explain why many are hesitant to raise wages—only around 20% of small business owners believe sales will increase, according to the poll.