Salaries Are Rising for Small Business
By: Evan Rodd, PayScale
When it comes to salaries, big businesses and large corporations are usually the first to offer positions with high earning potential. Sadly, during the height of the “great recession,” companies of all sizes felt the pinch. Quarter by quarter, wages, benefits, and employees decreased in number, making way for an economy that showed small business owners very little forgiveness.
Yes, the times have been tough, but the numbers are improving. The PayScale Quarterly Index from Q4 2012 shows an increase in wages. In fact, growth is the highest it has been in years, showing an overall increase of 3 percent.
Could Small Business Lead the Salary Trend?
Normally, a surge in salaries equals a trickle-down effect, as wage growth for larger companies benefits the economic needs of small businesses.
However, in Q3 and for the first time in the history of the PayScale index, smaller companies experienced larger pay increases than their medium, and large-sized competitors.
In Q4, the pay increase gap decreased even further; small business wages grew 2.2 percent, as opposed to 0.9 percent for large companies. While wage growth for small companies still lags, they are finally catching up to their medium-sized and large company counterparts.
According PayScale’s lead economist Katie Bardaro, industries such as Mining, Oil and Gas Exploration, and Utilities have seen strong growth, as well as IT and Telecommunications. Health Care has remained consistent over the last two years, while Professional, Scientific and Tech services have also seen an improvement.
As Bardaro notes, this could be a sign of greater economic progress to come.
“Small companies don’t have a corporate HR structure that people have to go through for hiring, so they’re a lot faster-moving,” Bardaro says.
"If they’re having wage increases, that’s an encouraging sign that they’ll hopefully spread out to the larger and medium-sized companies as well.”
The Small Business Hiring Advantage
Hiring managers are encouraged to take these developments into consideration when designing compensation structures.
Depending on your field, there may be more incentive for talent to apply for positions within smaller companies – this can be especially true for Gen Y and small business.
Small-scale HR structures can also mean more room to advance quickly, which can of course equal higher wages over time. The ability to stay competitive will assure you security, and retain high potential employees.
Monitoring wage trends in several industries is another useful strategy. For many employees, the potential to grow and develop within a company is more exciting that joining the ranks of an established conglomerate.
As long as your pay structure matches industry salary trends, desirable candidates are certain to see the benefit in taking a position with a growing company. If your staffing needs have already been met, you’ll want to make sure that your compensation plan remains competitive.
Whatever your business strategy, familiarize yourself with current salary data as often as possible. It could make a huge difference in the long-term success of your company.