Small Business Hiring Split in August: The Smallest Employers Kept Adding Jobs

Private-sector payrolls grew by 38,000 jobs in August, marking their weakest monthly gain since January. Most of that growth came from large employers: Establishments with at least 500 employees added 34,000 jobs, according to the August ADP National Employment Report.

Small establishments moved in opposite directions depending on their size. Those with one to 19 employees added 20,000 jobs, while establishments with 20 to 49 employees cut 17,000. Combined, small establishments gained just 3,000 jobs in August.

August hiring split sharply by employer size

The divide continued farther up the size ladder. Establishments with 50 to 249 employees added 2,000 jobs, while those with 250 to 499 employees lost 2,000. Medium-sized establishments therefore ended August flat overall.

ADP does not break its industry data down by employer size, so the report cannot identify which sectors drove the 17,000-job decline among establishments with 20 to 49 employees.

Newer weekly data suggest the broader private labor market strengthened toward the end of August. Private employers added an average of 16,250 jobs per week during the four weeks ending Aug. 29, up from 9,500 for the four weeks ending Aug. 1, according to ADP’s weekly employment update. That preliminary measure is not broken down by employer size.

Other indicators show softer hiring

Other measures also point to restrained hiring alongside continued difficulty finding qualified workers.

The Small Business Employment Watch put its August jobs index for employers with fewer than 50 workers at 99.13, roughly unchanged from recent months. Weekly hours worked rose 0.07%, marking a sixth straight month of positive growth.

Hiring activity also softened among surveyed business owners. In the August small-business jobs report, 56% of owners said they were hiring or trying to hire, down 5 percentage points from July. Thirty-five percent had openings they could not fill, while 82% of those actively hiring reported few or no qualified applicants.

A seasonally adjusted net 17% planned to create jobs over the next three months, down 3 points from July. The measures differ, but all point to restrained hiring alongside continued recruiting difficulty.

Pay growth is cooling, not disappearing

Pay pressures have eased without disappearing. Hourly earnings among small-business employees rose 2.89% year over year in August, while weekly earnings increased 3%. Separately, a net 31% of surveyed owners reported raising compensation, and 18% planned further increases over the next three months.

Across the wider private labor market, median base pay increased 3.2% from a year earlier. Workers who changed jobs saw base pay rise 4.7%, compared with 3% for those who stayed, leaving small employers competing for experienced candidates even as overall hiring slows.

When does another hire make sense?

National employment reports can help owners benchmark the labor market, but the strongest hiring signals usually come from inside the business. Rising overtime, persistent backlogs, longer customer wait times, missed deadlines, employee burnout, and regularly turning away work can all point to a team reaching capacity.

Owners should also compare the recurring cost of a new hire with the revenue, productivity, or capacity that position is expected to create. Fit Small Business’s guide to how to hire employees covers the planning, recruiting, and onboarding steps once the need for another worker becomes clear.

August’s numbers are only one month of data, but they show how much can get lost in a broad “small-business hiring” figure. The smallest establishments were still adding workers while the next-smallest tier pulled back, giving owners another reason to weigh national trends against their own staffing pressure and financial capacity.