Workers saw record hourly earnings growth and employment levels continued to rise as 2021 drew to a close. This is according to the aggregated payroll data of approximately 350,000 Paychex clients with fewer than 50 employees, released monthly in the Paychex | IHS Markit Small Business Employment Watch. According to the report, Arizona ranked third in small business job growth in December with an index of 102.26. Phoenix ranks fifth among all metros with an index of 101.82.

The December data shows hourly earnings growth improved to 4.27 percent, the highest level since reporting began ten years ago. Hiring at small businesses also ended the year on a high note with the Small Business Jobs Index improving 7.31 percent from the prior year and 0.22 percent for the month.

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“Small business employment continues to rise as we end 2021, contributing jobs and rapid earnings growth to our sharp recovery from the COVID-19 downturn,” said James Diffley, chief regional economist at IHS Markit.

“Over the past several months, we’ve seen steady and sustained increases in our hourly earnings growth. In December, average hourly earnings reached $30.00, ” said Martin Mucci, Paychex CEO. “Employers are responding to the pressures of the tight labor market by raising wages and workers are benefiting.”

In further detail, the December report showed:

• Hourly earnings growth and weekly earnings growth are both above four percent. Each measure was at less than three percent growth as recently as June.

• Hourly earnings grew 4.27 percent during 2021, resulting in an average hourly wage of $30.00.

• Hourly earnings growth exceeded four percent in all regions of the U.S.

• Leisure and hospitality hit double-digit hourly earnings growth (10.69 percent) to lead all industry sectors.

• The Small Business Jobs Index increased to 100.94 in December, its highest level since August 2014. The rate of growth, however, has slowed for the past two months (0.50 percent in October, 0.27 percent in November, and 0.22 percent in December).

• The West overtook the South as the top region for small business employment growth.

• Texas remained the top state for small business hiring, and Dallas the top metro.

Paychex business solutions reach 1 in 12 American private-sector employees, making the Small Business Employment Watch an industry benchmark. Drawing from the payroll data of approximately 350,000 Paychex clients with fewer than 50 employees, the monthly report offers analysis of national employment and wage trends, as well as examines regional, state, metro, and industry sector activity.The complete results for December, including interactive charts detailing all data, are available at www.paychex.com/watch.