Arizona experiences strong job growth — but here’s the bad news

The competitive job market continues to drive wage growth higher, according to the latest Paychex | IHS Markit Small Business Employment Watch. Steady growth in hourly earnings and hours worked – with hours worked in December posting the strongest gains since 2012 – pushed weekly earnings growth to 4.13 percent, a new all-time high for employees of small businesses. The pace of small business job growth remains consistent, with the national jobs index increasing slightly (0.06 percent) in December to 98.16.

Arizona and Phoenix again rank third among states and metros, respectively, for small business employment growth in December. Arizona’s job index is 99.49 and Phoenix’s is 99.43. However, Arizona ranks second to last in hourly earnings growth with a 12-month growth rate of 1.87 percent.

“Small business job gains have flattened in the second half of the year as labor markets prove very tight,” said James Diffley, chief regional economist at IHS Markit. “In response, weekly earnings have accelerated, surging from 2.49 percent mid-year to 4.13 percent at year-end.”

“The new high seen in weekly earnings growth this month is certainly positive news for the employees of small businesses,” said Martin Mucci, Paychex president and CEO. “Not only are businesses raising wages, but they’re also increasing hours for their current employees, a sure sign employers are responding to the pressures of the tight labor market.”

Broken down further, the December report showed:

• The South remains the leading region for small business employment growth; the West continues as the top region for hourly earnings growth, followed closely by the Northeast.

• Tennessee remains the leader among states in small business job growth; New York leads in hourly earnings growth at the state level. 

• Dallas is again the top metro for small business job growth; Los Angeles again leads metros in hourly earnings growth.

• Leisure and Hospitality tops industry sectors in all three wage growth components, hourly and weekly earnings as well as weekly hours worked. 

The complete results for December, including interactive charts detailing all data at a national, regional, state, metro, and industry level, are available at www.paychex.com/employment-watch.