Hire ground: survey says hiring is up, but paychecks are down in the small-business world

Entrepreneur, March, 2005 by Mark Henricks

SMALL BUSINESSES hired more people in 2004, but paid them less, according to the Small Business Scorecard compiled by SurePayroll, a Skokie, Illinois, payroll service.

To generate the data, SurePayroll polled its over 14,000 small-business customers across the country. Small businesses reported having 4.4 percent more employees last year. However, the average paycheck declined 4.8 percent. For detailed information on each region, see "What's the Score?"

SurePayroll president Michael Alter says the 2004 Scorecard, which will be updated monthly by the company and featured quarterly in Entrepreneur, provides valuable insight into the small-business economy. "We've moved from what everybody said was a jobless recovery in 2003 to a payless recovery in 2004," Alter says.

Alter attributes the wage squeeze to rising interest rates, oil prices and other costs. "All the major costs went up, yet most small businesses have been unable to raise prices," he says. "The way they were able to continue to grow was to hire more workers at lower wages."

While being able to hire more workers for less money may seem to be a positive for businesses, eventually, smaller paychecks could reduce consumer spending, which would bode ill for the overall economy. Regardless, says Alter, "I think 2005 is going to be a good year for small business."

For more information on the Scorecard, visit www.surepayroll.com/scorecard.

What's the Score?

After polling over 14,000 small businesses,
Skokie, illinois-based SurePayroll revealed that
entrepreneurs hired more people in 2004, but paid
them less, Here's how each region stacked up:

REGION       NO. OF EMPLOYEES   AVERAGE PAYCHECK

Nationwide   +4.4%              -4.8%
Midwest      0.9%               -4.2%
Northeast    -3.1%              +3.9%
South        1.9%               +0.9%
West         +6.3%              -7.6%

SOURCE: SurePayroll