Weekly Earnings Growth Continues to Increase as Jobs Growth Holds Steady

ROCHESTER, N.Y., Feb. 4, 2020 /PRNewswire/ — The latest Paychex | IHS Markit Small Business Employment Watch reflects a continuation of the tight labor market to start 2020. Weekly earnings growth improved for the 13th consecutive month, reaching 3.59 percent in January. Weekly hours worked were up 0.83 percent from last year, contributing to the growth in weekly earnings. The pace of small business employment growth remains consistent, with the national jobs index increasing slightly (0.01 percent) in January to 98.18.

At 98.18, the Paychex | IHS Markit Small Business Jobs Index is up 0.04 percent during the past quarter, but down 0.76 percent from last year. • At 2.89 percent, hourly earnings growth dipped below the three percent mark to begin 2020.

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At 98.18, the Paychex | IHS Markit Small Business Jobs Index is up 0.04 percent during the past quarter, but down 0.76 percent from last year. • At 2.89 percent, hourly earnings growth dipped below the three percent mark to begin 2020.

“The national index has been flat since mid-year 2019, signaling a continued tight labor market for small businesses,” said James Diffley, chief regional economist at IHS Markit.

“With election season heating up and the economy top of mind for business owners, this month’s Small Business Employment Watch demonstrates the continuing stability of jobs growth recently, as well as weekly earnings improvement,” said Martin Mucci, Paychex president and CEO. “The data shows consistent employment growth and yet another month of encouraging wage growth, two key indicators that the economy is off to a solid start in 2020.”

Broken down further, the January report showed:

  • The South continues to top regions for small business employment growth; the West remains the leading region for hourly earnings growth.
  • Tennessee ranks first among states in small business job growth; New York leads in hourly earnings growth.
  • Phoenix became the top metro for small business job growth; San Francisco leads metros in hourly earnings growth.
  • At 5.12 percent, Leisure and Hospitality leads hourly earnings growth among industry sectors.

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

National Jobs Index

  • The decline seen in small business employment growth during the first half of 2019 has given way to hiring stability over the past two quarters.
  • Up a modest 0.01 percent in January, the national index continues to show very little change in job gains.
  • At 98.18, the Paychex | IHS Markit Small Business Jobs Index is up 0.04 percent during the past quarter, but down 0.76 percent from last year.

National Wage Report

  • Weekly earnings growth reached 3.59 percent, improving for the 13th straight month.
  • At 2.89 percent, hourly earnings growth dipped below the three percent mark to begin 2020.
  • Weekly hours worked are up 0.83 percent from last year.

Regional Jobs Index

  • Above 98, the Northeast is reporting positive year-over-year growth for the first time in nearly three years. Strong performance in the Leisure and Hospitality sector is a contributor to that growth, up 2.60 percent since last year in the Northeast.
  • Led by California, the West fell sharply in January (down 0.69 percent), and is now the weakest region for small business job gains.
  • At 99.13, the South is the strongest region for job gains, up 0.26 percent in January.

Regional Wage Report 

  • The West leads in hourly earnings and hours worked growth, with weekly earnings accelerating for the 12th consecutive month to 4.35 percent in January.
  • Due to an increase in hours worked, weekly earnings are on the rise in the Midwest, up to 2.81 percent this January compared to 1.97 percent in January 2019.

State Jobs Index

  • Fourteen of the 20 states reported an increase in the pace of employment growth in January.
  • Down 1.13 percent from the previous month and 2.47 percent from last year, California now has the lowest index among states at 96.67.
  • Tennessee and Arizona are the only states above 100.

Note: Analysis is provided for the 20 largest states based on U.S. population.

State Wage Report

  • New York, California, and Tennessee lead wage growth among states.
  • Paired with a significant decline in job growth, California is the top state for weekly hours worked and weekly earnings growth.
  • Texas trails all states in hourly and weekly earnings growth, 1.50 percent and 2.18 percent, respectively.

Note: Analysis is provided for the 20 largest states based on U.S. population.

Metropolitan Jobs Index 

  • Phoenix became the top metro for small business job growth in January as Dallas slowed for the sixth consecutive month.
  • The Southern California metros of Los Angeles, Riverside, and San Diego had the three weakest one-month growth rates among metros.

Note: Analysis is provided for the 20 largest metro areas based on U.S. population.

Metropolitan Wage Report

  • San Francisco (4.25 percent) and Los Angeles (4.23 percent) are the only metros with hourly earnings growth above four percent.
  • At 3.77 percent, hourly earnings growth is surging in Baltimore.
  • Houston (1.16 percent) and Tampa (1.26 percent) trail significantly in hourly earnings growth.

 Note: Analysis is provided for the 20 largest metro areas based on U.S. population.

Industry Jobs Index

  • All industry sectors saw growth in January, except Leisure and Hospitality, down 0.53 percent.
  • Trade, Transportation, and Utilities and Manufacturing remain below 97, though both reported positive gains during the past three months.

Note: Analysis is provided for seven major industry sectors. Definitions of each industry sector can be found here. The Other Services (excluding Public Administration) industry category includes religious, civic, and social organizations, as well as personal services, including automotive and household repair, salons, drycleaners, and other businesses.

Industry Wage Report  

  • At 5.12 percent, Leisure and Hospitality leads hourly earnings growth among sectors, with Manufacturing a distant second at 3.61 percent.
  • Education and Health Services trails all other sectors in hourly earnings growth at 1.56 percent.
  • Construction slowed below three percent hourly earnings growth in December for the first time in 2019, and fell further in January to 2.71 percent.

Note: Analysis is provided for seven major industry sectors. Definitions of each industry sector can be found here. The Other Services (excluding Public Administration) industry category includes religious, civic, and social organizations, as well as personal services, including automotive and household repair, salons, drycleaners, and other businesses.

For more information about the Paychex | IHS Markit Small Business Employment Watch, visit www.paychex.com/employment-watch and sign up to receive monthly Employment Watch alerts.

*Information regarding the professions included in the industry data can be found at the Bureau of Labor Statistics website.

About the Paychex | IHS Markit Small Business Employment Watch
The Paychex | IHS Markit Small Business Employment Watch is released each month by Paychex, Inc., a leading provider of payroll, human resource, insurance, and benefits outsourcing solutions for small-to medium-sized businesses, and IHS Markit, a world leader in critical information, analytics, and expertise. Focused exclusively on small business, the monthly report offers analysis of national employment and wage trends, as well as examines regional, state, metro, and industry sector activity. Drawing from the payroll data of approximately 350,000 Paychex clients, this powerful tool delivers real-time insights into the small business trends driving the U.S. economy.

About Paychex
Paychex, Inc. (NASDAQ: PAYX) is a leading provider of integrated human capital management solutions for human resources, payroll, benefits, and insurance services. By combining its innovative software-as-a-service technology and mobility platform with dedicated, personal service, Paychex empowers small- and medium-sized business owners to focus on the growth and management of their business. Backed by more than 45 years of industry expertise, Paychex serves approximately 670,000 payroll clients as of May 31, 2019 across more than 100 locations in the U.S. and Europe, and pays one out of every 12 American private sector employees. Learn more about Paychex by visiting www.paychex.com, and stay connected on Twitter and LinkedIn.

About IHS Markit (www.ihsmarkit.com)
IHS Markit (NYSE: INFO) is a world leader in critical information, analytics and solutions for the major industries and markets that drive economies worldwide. The company delivers next-generation information, analytics and solutions to customers in business, finance and government, improving their operational efficiency and providing deep insights that lead to well-informed, confident decisions. IHS Markit has more than 50,000 business and government customers, including 80 percent of the Fortune Global 500 and the world’s leading financial institutions. Headquartered in London, IHS Markit is committed to sustainable, profitable growth.

IHS Markit is a registered trademark of IHS Markit Ltd. and/or its affiliates. All other company and product names may be trademarks of their respective owners © 2020 IHS Markit Ltd. All rights reserved.

The decline seen in small business employment growth during the first half of 2019 has given way to hiring stability over the past two quarters.

View photos

 

The decline seen in small business employment growth during the first half of 2019 has given way to hiring stability over the past two quarters.

Weekly earnings growth reached 3.59 percent, improving for the 13th straight month.

View photos
Weekly earnings growth reached 3.59 percent, improving for the 13th straight month.

Insurance Three Card Monte

Happiest of New Years!

“At present, the state of Florida is considering legislation to close “the gap in coverage issue” that they understand as a PEO issue and not an overall issue in general. It is unfortunate that once again they have targeted a specific industry for an issue that is much bigger than the PEO industry. The issue at hand is employers not providing workers compensation for their employees, whether it be through a PEO or not. This has been an issue for years, which is why I re-post the below to make sure everyone understands what the real issue is. Another thank you to Jon Coppelman, with Workers Comp Insider, for allowing me to express my opinion.” – Paul Hughes

“History doesn’t repeat itself, but it does rhyme.”
— Mark Twain

We are very proud of our PEO client’s ethical fabric, sophistication and professionalism.  We consider them family.

Logic would suggest statute, insurance departments and credit rating organizations each play a vital role in how my profession as an insurance agent is governed as well as the insurance carrier community of any given state.  The process of formal governance for insurance carriers involves the issuance, and ongoing management of “Certificates of Authority”.  This process ensures that only good people with enough money and who have proved to have the management team and platform to operate an insurer are allowed to. What types of products are allowed in the given state for any specific carrier fall on statute; which is then administered through the authorities granted that carrier.  Unfortunately, I know of no state where a different size or solvency level needs to be in place to have the authority to offer a large deductible.

Just three years ago, (seven now), author Jon Coppelman was kind enough to allow me a rebuttal to an article inferring that it was the PEO community that rendered another insurance carrier insolvent.

The full story here… my piece below:

http://www.workerscompinsider.com/2012/05/risk-transfer-a-1.html

Follow Up – June 7, 2012

After posting, I received a call from Paul Hughes, CEO of Risk Transfer (now Libertate Insurance Services, LLC), who is quoted above. While not contesting the premise that large deductibles are poorly managed in Florida (and elsewhere), he believes that I unfairly singled out PEOs in the blog. The fundamental issue is the failure of the state to adequately regulate and oversee large deductible programs. I agree.

Please take a few moments to read Paul’s response, which employs the useful metaphor of a casino for the risk transfer industry:

“The core issue to me is the role of the regulator versus the business owner in the management of the “casino” (insurance marketplace). That is one of the parts of Jon’s article in Workers Comp Insider that blurs the line a bit on what the PEO’s role is within the casino and whose job it is to set the rules. The casino is the State as they certify the dealers to play workers’ compensation (Carriers, MGU’s, MGA’s, Agents and Brokers) and the State also certifies that the players are credible (not convicted of insurance fraud) and can pay/play by the rules of the house. The rules are set by the house and the games all require public filings – ability to write workers’ compensation (certificate of authority), ability to offer a large deductible plan (large deductible filings), agent license, agency license, adjusters license and any other deviation from usual business practices (like the allegations that one now defunct insurance carrier illegally charged surplus notes to desperate PEO’s in the hardest market the industry has ever seen). The “three-card monte” that Jon alludes to in this article is managed not by the dealers (carriers), but by the house (state). Would a real life casino consider it prudent to allow one of their dealers to expose 20% of their $5m in surplus through high deductibles sold to PEO’s with minimal financial underwriting and inadequate collateralization? Would any casino write harder to place (severity-driven) clients to include USL&H, roofers etc with the minimum amount of surplus needed to even operate a carrier…? Of course not. These “big boy” bets would never be allowed in Vegas without the pockets being deep enough to cover the losses.”

Unfortunately, it is 2015 and no states that I know of have large deductible language that addresses the inherent credit risk of the product.  A few more carriers have gone insolvent as a result of this specific issue, many policyholders with lost collateral and deposit instruments and and the claims continue to pile up on the guaranty funds.  The easy scapegoat is the PEO or Staffing Services policyholder, yet in these cases they were the consumer of a very highly sophisticated financial services product.  Taking a $1m position on your workers’ compensation program is taking a bet on 90% of your expected losses.  This is an extreme shift that deserves more attention by the regulators that manage the product.  The carrier then takes the additional bet that the losses are going to be what is expected and that the entity buying the policy will be an “ongoing concern” for the 7-10 year payout pattern associated with the payment of workers’ compensation claims.  AM Best does not factor credit risk on earned premiums so that $50m of manual premiums becomes $10-15m after the application of the deductible credit.  If the expected losses under the deductible are not properly collateralized,  “A” and “B” companies on paper one day are in run off the next.

Logic would tell us that taxpayers should not have to bail out states that create law and the insurance companies that profit under it.   Rules around credit risk for loss sensitive workers’ compensation plans must be addressed or logic will tell us the same scapegoats will keep being the target with the same issues not prevented in the future.

A 7.5% Workers’ Compensation Rate Decrease Has Been Approved By The OIR

HOT OFF THE PRESS from our friends at NAPEO!

TALLAHASSEE, Fla. –  Florida Insurance Commissioner David Altmaier has issued a Final Order granting approval to the National Council on Compensation Insurance (NCCI) for a statewide overall decrease of 7.5% for Florida workers’ compensation insurance rates. This applies to both new and renewal workers’ compensation insurance policies effective in Florida as of January 1, 2020.

“Florida is an ideal place to do business and I am committed to keeping our workforce and economy strong. This decrease in workers’ compensation rates is very good news for employers and one more reason for companies to be located in our great state,” said Governor Ron DeSantis.

“Florida businesses are the backbone of our economy and when they see cost savings, our local communities benefit. Affordable workers’ compensation insurance means more workers are protected. It is great to see the costs of this coverage continue to decrease for those businesses who call Florida home,” said CFO Jimmy Patronis.

“I am pleased to issue this order, reducing workers’ compensation rates for Florida’s businesses, providing another year of rate relief. Increased innovation in workplace practices and continued emphasis on safety for employees has meant a decline in the workers’ compensation claims and Florida businesses will see the results of those efforts reflected in their insurance rates,” said Insurance Commissioner David Altmaier.

Commissioner Altmaier approved the NCCI amended rate filing, which met the stipulations of the Order on Rate Filing issued by the Commissioner on October 24, 2019.

For more information about the NCCI public hearing and rate filing, visit OIR’s “NCCI Public Rate Hearing” webpage.​ 

The Florida Office of Insurance Regulation has primary responsibility for regulation, compliance and enforcement of statutes related to the business of insurance and the monitoring of industry markets. For more information about OIR, please visit our website or follow us on Twitter @FLOIR_comm.

Sponsored by Libertate Insurance Services, LLC

Hurricane Dorian Destroys the Bahamas

As everyone is aware, Hurricane Dorian took away hundreds of people’s homes as well as ripped apart families in the Bahamas. Ballator Insurance Group is doing everything we can to assist in the relief efforts and we ask that everyone do the same.

The link below is for a Hurricane Relief Supply Drive this coming Monday and Tuesday, September 9th and 10th in Orlando. #BAHAMASTRONG

https://www.facebook.com/events/890753147946395/

You can also donate to the National Association of the Bahamas at the following link.

NAB

Please show your support!

Hurricane Dorian Update

As many of you know, Hurricane Dorian is projected to head toward Florida! We just want to inform everyone that we may have limited access to emails and calls as we are based in Orlando. For those of you who will be affected, please stay safe. Below is a link tracking Dorian to keep you all updated.

https://www.nhc.noaa.gov/