Small business hiring is swinging higher
Want another sign of the economic rebound? Small-business hiring is on the rise.
The Paychex/IHS Small Business Job Index posted a 0.19 percent monthly increase in February, rising to 100.84. That follows January's 0.09 percent gain and marks the second straight month of advances. On a year-over-year basis, the index, which measures hiring at businesses with 50 or fewer workers, slipped 0.31 percent.
"Small businesses are off to a solid start in 2015 when it comes to job growth," said Martin Mucci, president and CEO of Paychex, in a press release. "While it's still early in the year, the first two months have seen consistent positive improvement."
Nationally, signs of increased small-business hiring abound. Only two regions that were measured in February showed a decline, and 13 of the 20 states analyzed have index levels topping 101. The Pacific Region had the best performance in February, while New England, which has gotten pounded this winter with record-setting snowfall, showed the worst one-month performance.
Indiana edged out Texas and Florida to become the leading state for small-business hiring, and Dallas led all metropolitan areas.
The index is calculated using aggregated small-business payroll data on 350,000 small businesses and with a base year of 2004 because it was a period of expansion before the start of the economic downturn. Although politicians often refer to small businesses as an engine of economic growth, economists have disputed this notion in recent years.
Nonetheless, the report does underscore positive job market trends. During 2014, 37 states and the District of Columbia showed statistically significant improvements in employment. Texas had the largest gains (457,900), followed by California (320,300) and Florida (230,600). The biggest job losses were in Minnesota (5,200), Idaho (1,700) and New Mexico (1,600). The strengthening continued in January, when the nation's overall unemployment rate slipped to 5.7 percent.
According to the Federal Reserve, economists believe the "long-run normal" unemployment rate would be between 5 percent and 6 percent over the next five to six years in the absence of "shocks."
Jobless rates for certain categories of workers, though, remain stubbornly high. Unemployment for Millennials, for instance, was 14 percent as of January. According to Fivethirtyeight.com, this generation is poorer than people their age were in 1989 because so many are deeply indebted with student loans and are less likely to own a house.
The national jobless rate for African-Americans was 10.3 percent in January. In the two-thirds of states for which data are available, the median real wages of African-Americans fell between 2000 and 2014, while pay for whites rose 2.5 percent during the same period. Two liberal think tanks, the Center for Popular Democracy and the Economic Policy Research Institute, argued in a report released today that these job-market disparities indicate the Federal Reserve should resist pressure to raise interest rates.
"America needs the Federal Reserve to concentrate on labor market stability and ensure that wages are rising with productivity, so that workers reap the benefits from their efficiencies and hard work; that means prioritizing a wage growth target, rather than inflation," the report said. "A Federal Reserve dominated by banks and major corporations will produce an economy that works for them, at the risk of leaving tens of millions of working families -- particularly Black working families -- with little hope of a better life."