Labor Market Steady, Pay Raises Iffy, SBA Changing Loan Program

Hey everybody it's Gene Marks and welcome to this week's episode of the Paychex THRIVE Week in Review. This is where we take some news during the week that impacts your small business and mine and we talk about it a little bit.

Now, I know that tariffs have been way in the news. I get that, but we're not going to cover tariffs this week. You get enough of that coverage from all the other major news outlets. And besides we've talked about tariffs before. There are a few other things that are going on that do impact businesses that have been overshadowed by some of the tariff news and economy news, and I want to make sure that you are aware.

So, first of all has to do with jobs. Now, last week the Department of Labor released their job numbers and indicated that the economy added about 228,000 new jobs last month, which was a surprise and above expectations for many in the government and economists, as well.

Well, that news dovetailed into what Paychex has been reporting. Paychex released their Small Business Employment Watch, and it found that jobs showed little change in March and were at levels that were consistent with the last several quarters.

According to John Gibson, the CEO of Paychex, he said, “According to our most recent data, the small business labor market is fundamentally healthy and showing no current signs of a recession.” He also said, “The job growth in the U.S. small business continues at levels we have seen over the last several quarters while wage growth has remained below 3% for the fifth straight month.”

So, bear in mind, even though we have lot of warnings about the economy and issues with tariffs as well, people are concerned. Not only is the Department of Labor reporting good job growth this past month, but the same goes for Paychex, as well, showing very consistent levels of job growth during that same period of time.

Next, let's move into a new study that was done by PayScale, and this has to do with salary increases. Want to make sure that you are aware of what is going on. This study is talking about what increases employers are giving to their employees this year, and I think employees need to have lower expectations as to their potential raises.

The number of organizations planning to give base pay bumps this year, according to a report in Yahoo Finance based on the PayScale study, has dipped 6 percent. Employers say they're actually cutting pay increases entirely. Roughly 2 in 10 are scaling back raises and 14 % are downsizing salary offers.

The researchers said that between the precarious economy, increased employer power in the labor market, and a heated political climate, organizations are grappling with increased tensions when it comes to compensation. There's an expectation to reduce compensation costs while economic conditions are uncertain.

Also, the PayScale study found that employers who are doling out raises, say they will hike salaries by an average of 3.5% this year compared to 3.8% in 2024 and 4.8% in 2023, which was the highest level in two decades.

So, according to PayScale, more employers are cutting back on salary increases this year and not giving any salary increases at all. The average salary increase will be about 3.5%.

Finally, there's two bits of news that comes from the Small Business Administration this week, both reported in the Philadelphia Business Journal. The first is that the Small Business (Administration) is going to be ending some hardship accommodations, which allowed some businesses that were showing that they were under economic hardship to pay less or defer payment on their COVID-era loans.

Well, those accommodations are going to be over, according to the SBA, and effective March 19. These accommodations will no longer be open. Business owners with Economic Injury Disaster Loans in the program have started receiving emails in recent weeks notifying them of the program's disclosure. The agency is still going to provide short term payment assistance to borrowers experiencing temporary financial conditions, but according to the email, such assistance is only for business not previously enrolled in the program with loans less than 120 days past due and not currently charged off.

So, if you were receiving accommodation – hardship accommodation – those benefits are going to be ending. They've already ended as of the middle of March.

And, also, news from the SBA. They have announced that their loan fees for SBA-backed loans, like their Section 7(a) loan, are going to be going up this year. So, it means that if you are applying for those loans, you're going to be paying probably a couple thousand dollars more on average, according to another report in the Philadelphia Business Journal for SBA loans in 2025.

My name is Gene Marks, and you have been watching and or listening to the Paychex THRIVE Week in Review. If you any help or advice or tips in running your business, please sign up for our newsletter. Go to paychex.com/thrive. You can sign up there and get some assistance, as well as have the access to prior episodes of this podcast.

Hope this news is of interest to you. I'll be back next week with more news that impacts your business and mind. We will see you then. Take care.

Do you have a topic or a guest you’d like to hear on THRIVE. Visit payx.me/thrivetopics and send us your ideas or matters of interest. Also, if your business is looking to simplify your HR, payroll, benefits or insurance services, see how Paychex can help. Visit the resource hub at paychex.com/worx. That’s W-O-R-X. Paychex can help manage those complexities while you focus on all the ways you want your business to thrive.

I'm your host, Gene Marks, and thanks for joining us.

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