Small businesses are desperate for workers when companies freeze hiring

While some companies have slowed the pace of hiring because of fears of an economic slowdown, demand from small businesses for new workers shows no signs of slowing, said Paychex CEO Marty Mucci.

“We’re still not seeing any strong recessionary measures for small businesses,” he said on CNBC’s “Squawk Box” on Tuesday.

Hiring at U.S. small businesses with fewer than 50 employees has slowed for five straight months, according to data from Paychex and IHS Markit, but Mucci said that was more related to a lack of applicants than a reflection of small businesses pulling back.

“The hardest thing for small businesses is their demand, and they have a need for staff – it’s a little bit harder for them to find it,” he said.

This is the opposite of what is happening in some large companies. Personal wages rose by 132,000 in August, down from a gain of 268,000 in July, according to ADP’s monthly wage report.

ADP chief economist Nella Richardson told CNBC that the data “suggests a shift toward a more conservative hiring pace, perhaps as companies try to navigate the economy’s conflicting signals.”

“We may be at an inflection point from high-paying job gains to normalcy,” she added.

But according to ADP data, companies with 500 or more employees gained 54,000 and medium-sized businesses gained 53,000, while those with fewer than 50 employees gained 25,000.

Mucci said there are small businesses that are feeling “the pressure of wage inflation.”

Hourly earnings averaged $30.71 in August, up $1.51 from the same month last year, according to Paychex. Hourly earnings rose 5.18 percent in the month, matching the record since 2011 in May.

Difficulty finding workers and paying higher wages could cause employment activity to continue to slow, Mucci said. [hiring] A little lower.”

50 percent of small business owners said it was more difficult to hire in the third quarter of 2022 than a year ago, according to a recent CNBC/SurveyMonkey Small Business Survey, with 28 percent saying they have a job vacancy for at least three months to fill. While those figures are relatively unchanged from previous quarters, they highlight the difficulties around hiring that many small business owners are facing.

There were 11.24 million job openings in July, according to the Job Vacancies and Job Turnover Survey, with job vacancies outnumbering workers by a 2-to-1 margin.

Friday’s August nonfarm payrolls release from the Bureau of Labor Statistics is expected to add to the view that employment demand remains strong.

That labor crisis has forced many small businesses to cut hours or close on certain days, Mucci said. However, according to federal labor data, there are record numbers of workers with at least two jobs. There were 433,000 workers with two full-time jobs in July, compared with 401,000 in July 2021, data from the U.S. Bureau of Labor Statistics show.

“Many people are looking for a second job, and hopefully small businesses will be a positive recipient of that,” he said.