Parson’s mostly right about big growth in small-business wages

During his recent election announcement for governor of Missouri, Mike Parson trumpeted a strong economy in the state, taking particular care to highlight increases in small-business wages.

"With record lows in unemployment, more people are going back to work in Missouri," Parson said Sept. 8. "Wages are on the rise — in fact we were the top small-business wage growth state in the nation."

Does the governor’s comment check out? We wanted to investigate.

A spokesperson for Parson’s campaign cited an April 2019 article from St. Louis Business Journal that used numbers from an April 2019 report from Paychex/IHS Market Small Business Employment Watch to show Missouri ranked first in the country in hourly wage growth for small businesses.

At $25.55 per hour, Missouri small business wages were up 3.48%, or 86 cents, that month. The Show-Me State finished first ahead of California, New York, Arizona and Illinois in small-business wage growth.

According to the Small Business Employment Watch’s September report, Missouri now ranks third in the country in hourly wage growth increase at 3.38% (New York is second at 3.53% and Illinois is first at 4.11%). If assessing for weekly wage growth rise, Missouri is second at 3.83%. Illinois comes in at 3.84%, just .01% better than Missouri.

Overall, Missouri has been a top-five small business wage growth state (by weekly earnings) every month this year, according to Paychex’s analysis.

So what is Paychex, and how does it calculate its data for the Small Business Employment Watch? Paychex is a human resources and payroll company with over 600,000 clients nationwide. According to a media spokesperson for the company, it "uses up-to-date, aggregated payroll data from approximately 350,000 of Paychex's small business clients with fewer than 50 workers" to keep its data current.

All businesses whose wage data is included in the report must have run payroll for the month that the data is being compiled and the three months prior. According to a Paychex spokesperson, the sample includes millions of small-business workers.

How many small-business workers are there in Missouri and in the United States? It depends what you consider a small business.

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Paychex defines a small business as a firm with fewer than 50 workers, but the U.S. Small Business Administration defines small businesses as firms with less than 500 workers. According to the SBA’s 2019 profile for the state of Missouri, there are 1.2 million small business employees in the state of Missouri alone, and 58.9 million in the country.

In other words, while Paychex represents a significant portion of small businesses, it’s not the whole pie. The company itself claims to work with one in 12 private sector employees.

Parson said, "Wages are on the rise — in fact we were the top small business wage growth state in the nation."

This statement is backed by statistics from Paychex that showed it to be true for the month of April, although Missouri fell behind in later months.

Since it can’t be proven that Paychex takes a representative sample, and it’s the only indicator Parson cites, we rate this comment as Mostly True.