The Big Payoff The trend in SMB hiring is pointing to long-term quality over short-term quantity.
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Small businesses hired fewer people but paid them more at theend of 2005, reversing a trend in the SurePayroll HiringIndex that lasted more than a year. "We've seen ashift in the data," says Michael Alter, president of Skokie,Illinois-based payroll service SurePayroll. "There have beenthree down months of hiring, and [for] five of the last six months,salaries have been rising."
In November, the nationwide hiring index reflected a downtrendthat began in September and negated most of the gains brought aboutby the slow expansion of small-business hiring during the firstpart of the year. Indications were the year would end with a meager0.3 percent increase in the number of people on small-businesspayrolls, based on a count of paychecks issued to SurePayroll's15,000 small-business customers.
As hiring dropped slightly, salaries went the other way.SurePayroll's Pay Index rose five of the past six months priorto December, partially undoing a drastic fall in small-businesssalaries that began in 2004. Small-business salaries across thenation averaged $28,888 annually. That was down 1.28 percent for2005, but much better than 2004's 4.4 percent slide.
Together, the trends indicate that small-business employers areemphasizing quality over quantity when it comes to hiring andcompensation. "That says to me they're paying their goodworkers more money to keep them, or they're trading out thepoor performers for better employees," Alter says.
Use of contractors showed little change, and in the Northeast,hiring levels continued to rebound as the region recovered from2004, when it did worse than other regions. Alter projects wageswill likely keep climbing in the coming year, while hiring levelswill stay soft. "We're seeing continued caution insmall-business owners," he says. "They're not seeingthe growth that other folks are seeing."
