Dive Brief:

• Jobs and wage growth for U.S. small businesses declined in August, while weekly hours worked increased, according to a data analysis by IHS Markit and Paychex. Last month, the companies' small business jobs index, which measures job growth based on payroll data, dropped to a score of 99.22. It is the lowest monthly score on the index since December 2010 as well as the third consecutive monthly decrease.
• Weekly hours worked rose during the past 21 months, an indication that employees are working longer hours to make up for reduced hiring, Paychex said. Professional and business services was the only sector to improve on pace of job growth dating back to August 2017. Hourly earnings growth in August was below 2%; leisure and hospitality had the strongest earnings growth by industry, with 3.8% growth, followed by construction at 2.9%.
• Among U.S. regions, the South remained on top for the 28th consecutive month​ at an index of 99.80, despite having the weakest year-over-year growth rate, while the West held at an index of 99.32. All other regions showed a declining index. The West had the highest regional wage growth, with a rate of 3% year-over-year and a resulting average hourly rate of $27.97.

Dive Insight:

Large companies are struggling to hire and compensate workers in a tight labor market, but the struggle may be even greater for small businesses. Nearly half (45%) of respondents in a recent SurveyMonkey study cited the skills gap as a cause, with "lack of education" among candidates being a top complaint. But the inability to compete with larger companies with deeper pockets is another concern, according to a quarter of the respondents.

The hiring slowdown for small employers isn't surprising, given the problems employers in general also face in attracting and retaining qualified candidates. When hiring slows, workers are often asked to make up for the slowdown by working longer hours.

Small businesses may have to face the challenge with relatively low-cost incentives to attract and retain workers in lieu of competitive wages. Offering flexible work schedules, a sought-after benefit among employees and job seekers, allows for greater balance between work and personal responsibilities. Small business owners also should not underestimate the impact of a values-driven organization in recruiting, which can be an indirect yet creative way to attract workers whose personal values align with particular brands and causes. Employers may also opt to expand their talent pools, a trend that is leading to success for some.