Small Business Hiring Holds Flat as Wages Lag
Owners should expect staff to absorb demand through longer hours while wage growth stays below three percent.
Updated on Nov. 3, 2026 in Employment
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Job growth among U.S. small businesses with fewer than 50 employees held steady in October 2026, according to the Paychex Small Business Employment Watch. Hourly earnings growth stayed below three percent for the 26th consecutive month, a signal for owners weighing wage budgets.
Why it matters
Flat small business hiring alongside sub-three-percent wage growth suggests employers are meeting demand by extending hours for existing staff rather than adding headcount. For operators, that points to tight labor budgets and a workforce that is being stretched rather than expanded.
The national jobs index reached 99.21 in October, up 0.06 points from September but still below its level a quarter and a year earlier. Hourly earnings grew 2.88%, weekly hours grew 0.11%, and weekly earnings grew 3.04%, based on Paychex's index of small businesses with fewer than 50 employees.
The players
Paychex
Rochester, N.Y.-based payroll and HR services provider serving about 840,000 small business customers, whose Small Business Employment Watch tracks hiring and wage trends.
The details
Employers met demand in October by increasing hours among their existing workforce rather than expanding headcount. Weekly hours worked grew for an eighth consecutive month, while hourly earnings growth remained below three percent. The national jobs index is built from two key components, the jobs index and wage data, which together track how small firms add staff and pay them.
Timeline
October 2026: small business job growth held steady and hourly earnings growth stayed below three percent.
November 3, 2026: Paychex published the Small Business Employment Watch report.
Market Landscape
The Paychex index places October's flat reading below its own readings from last quarter and last year, indicating that small business hiring has not regained the pace seen a year earlier. Hourly earnings growth below three percent for 26 consecutive months marks a sustained wage moderation in this segment.
Owners should budget for flat hiring and modest wage increases in the near term, with extended hours for existing staff serving as the main lever for meeting demand. Operations and finance teams should track weekly hours and hourly earnings against their own payroll data to see whether their experience matches the national pattern.
The takeaway
Small business employers are absorbing demand through longer hours rather than new hires, a pattern worth watching in next month's index. Operators should compare their own overtime and hiring plans against the sub-three-percent wage trend before setting next year's labor budget.
Further reading
For more on how hiring and wage pressures are shifting across the country, see Employment coverage.
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