Growth Strategies

Trends in Employee Compensation

Hiring may be down, but paychecks are still growing.
Magazine Contributor
2 min read

This story appears in the December 2006 issue of Entrepreneur. Subscribe »

September marked only the third month of 2006 in which small businesses hired more people than they let go, according to the SurePayroll Small Business Scorecard. SurePayroll's analysis of data from more than 17,000 small business customers showed its index of small business hiring finished the quarter at 10,439, up eight points from August and steady with where it was at the end of the second quarter. "It's not dramatically different, but it's a little bit of an upswing," says Michael Alter, president of the Glenview, Illinois, payroll service company.

September was the 13th consecutive month in which small-business salaries increased. Average salaries edged to $30,942 and are set to complete the year with an 8.4 percent increase. Though Alter noted that the salary index was still only at 1,007, just seven points higher than its starting mark in January 2004, it is still the highest it's been since SurePayroll began measuring. Along with other economic pressures, higher salaries are probably hampering business expansion, Alter says. "The biggest challenges have been interest rates continuing to rise and cost of fuel," he notes. "There's some hope in that gas prices are down. Having said that, we're continuing to see wages rising, and gas prices are very high vs. historical levels."

All told, the index had more positive implications than in past quarters but that growing businesses should expect a shift in the economy. Says Alter, "The real difference is what inflation will mean for small businesses and how they need to operate in an inflationary environment."

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