Midwest Tops in Job Growth, Help Wanted in Manufacturing, and CA Disconnects

Hey everybody, this is Gene Marks and welcome to this week's episode of the Paychex THRIVE Week in Review podcast. Thank you so much for joining me.

And hey, before I get started, let me remind you, if you're looking for advice or tips to help run your business, even some prior links to prior episodes of this podcast, please sign up for our THRIVE newsletter. Go to paychex.com/thrive, and I'll make sure you're getting the best information possible to help you run your business. So, let's get to the news, shall we?

The first item of news comes from, well, Paychex. According to the Paychex Small Business Employment Watch, the Small Business Jobs Index grew 0.18% points in March to 100.85. It was the first increase year to date, but it remains below pre-pandemic levels for the first three months of 2024. Hourly earnings growth for workers at U.S. companies with fewer than 50 employees continued a steady deceleration that began in mid-2020 to ending March at a 3.27% hourly earnings growth rate year over year.

John Gibson, the president and CEO of Paychex, says this: “An increase in the jobs index, coupled with a continued moderation of wage growth, reflects a relatively stable macroeconomic environment,” he says. “A tight job market for qualified workers, reduced access to affordable growth capital, and inflationary pressures continue to be headwinds for small and midsize businesses. They continue to manage hours worked to control cost and deal with inflation.”

Just a couple of highlights for you: The Midwest actually overtook the South as the top-ranked region for job growth, with four of the top five states for small business job growth being in the Midwest. All regions in every industry except manufacturing showed positive job growth in March. So, good news on the job growth.

Unfortunately, hourly wages, not such great news as they are still holding firm, even decelerating a little bit. That's according to this month's Paychex Small Business Employment Watch.

Now, I mentioned manufacturing and how job growth increased in every region, according to Paychex, other than manufacturing and – sorry, every industry other than manufacturing. Well, there is some news about manufacturing. This comes from the New Jersey Business and Industry Association, and just was reporting on a new report from Deloitte and the Manufacturing Institute and the National Association of Manufacturers.

The U.S. Manufacturing Industry, the report says, could require 3.8 million jobs to be filled within the next decade. However, despite substantial growth in the sector, U.S. manufacturing faces a skills gap and tight labor market. Without significant changes, the study's authors warn, more than five in 10 or almost 2 million of these jobs could go unfilled if workforce challenges are not addressed through 2033.

What are these workforce challenges? Well, workforce challenges are among the top concerns for U.S. manufacturers. Sixty-five percent of respondents in the survey said that attracting and retaining talent is their primary business challenge. These, you know, workforce skills, these are like digital skills to accelerate operations and products as they become more complex and information from smart, connected devices and systems. They all need to be integrated, you know?

I mean, roles like statisticians and data scientists and engineers and logisticians and computer and information system managers and software developers. On the production floor, the fastest growing will likely be those that require high-level skill sets like semiconductor or processing technicians, machinists, first line supervisors, welders, and electronics.

The bottom line is this: Manufacturing does look like it is growing in this country. I think there is good outlook for manufacturing. There is a lot of money being spent by the government on chips, manufacturing, and other areas, but the biggest issue that manufacturers face in this country is going to be not just attracting good employees, but skilled employees, as well. And the skills, as I just said, are really, really changing. It's not just standing over a machine and putting stuff into it. That kind of stuff could easily be automated with robots in the next decade. What really is needed is some thinking skills by workers, like I mentioned, engineers and data scientists and computer and information system managers on the manufacturing floor.

So, if you're in the manufacturing business, you've got to work really, really closely – and what my recommendation is, of course, is there are workforce development grants from your state. There's a Work Opportunity Tax Credit from the federal government, as well. These are all designed to help pay, to help not only get workers, but also get them skilled, as well. And skills will be a big, big part of the future for manufacturing.

Finally, I have news from California. This is from FOX 5 in California. The news is this: California could become the first state to give workers a right to disconnect. Assembly Bill 2751, which is introduced by an assemblyman in San Francisco this last week, would guarantee workers in the state the ability to have uninterrupted personal and family time by giving them the ability to disengage from emails, texts and calls during non-work hours.

According to Assemblyman (Matt) Haney, he says work has changed drastically compared to what it was 10 years ago. Smartphones have blurred the boundaries between work and home life. Workers shouldn't be punished for not being available 24/7 if they're not being paid for 24 hours of work.

With the proposed changes, according to the report, both public and private sector employees would be required to establish a right to disconnect policy for their workplace, permitting them to ignore communications when they are off the clock. That's what employers need to be doing.

Exceptions would be for emergencies or scheduling issues during off hours. Unionized workers who have a bargaining agreement with their employer are also excluded. Industries with traditionally late erratic hours or those that work they require workers to be on call would still be allowed to contact off-the-clock workers as long as those periods outside the workplace contact are stated in the employee contracts and standby time is compensated.

This right to disconnect law that's being proposed is nothing new. It's actually been implemented in more than 13 countries across the globe, starting with France back in 2017. Australia, Argentina, Belgium, Greece, Mexico, Italy, and Spain – these are among the countries that also have similar right to disconnect rules.

So, this bill is going to take a few weeks to get discussed and voted on in the Assembly and we'll see how it progresses in California. But trust me when I tell you, not only are other states watching this closely, but also the federal government, the Department of Labor as well, are also keeping an eye on it. Will a right to disconnect regulation be something that we see nationally? Well, we're going to see it in California first, maybe. So, let's keep our eyes on what's going on there.

You've been listening to the Paychex THRIVE Week in Review podcast, and my name is Gene Marks. Thank you so much for joining us again. Remember, if you are looking for some advice and tips, if you want to make sure you keep up to date on all the things that impact your business, sign up for our Paychex THRIVE newsletter. Go to paychex.com/thrive. Thank you so much for listening. Hope you got some good information from this podcast. We will see you again next week with a few items and news that impacts your business and some thoughts on that. Take care.

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