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Natural Disasters Stifle Small-Business Hiring

Stocks in this article: INTU ADP

MOUNTAIN VIEW, CALIF. ( TheStreet) -- Businesses with fewer than 20 employees added 45,000 jobs in May, flat as compared with new figures for the prior month, and the likely result of high gas prices and natural disasters, according to Intuit's (INTU) Small Business Employment Index.

Small businesses added 45,000 jobs from April 24 through May 23 -- fewer jobs than original estimated for April. Small-business employees also worked fewer hours last month and compensation dipped somewhat, according to Intuit.

Intuit says small-business hiring was flat from last month, and even those with jobs worked and earned less.

The data are based on approximately 64,000 small businesses using Intuit Online Payroll software. The May jobs data mean that approximately 865,000 jobs were created by small businesses since October 2009.

Intuit also revised the April employment growth rate for small businesses down to 45,000 jobs, or 0.2%, from 60,000, or 0.36% percent.

"The rate of small-business job growth is the same as April's," according to a statement by Susan Woodward, the economist who worked with Intuit to create the index, "but because compensation and hours dropped slightly, we can say the market for small-business employment is a bit softer than last month. However, in light of recent tumult in Japan, Greece and right here at home, it's a comfort that small-business employment continues to improve at all."

>> Small-Business Hiring Improves In April

Hourly employees working for small businesses put in an average of 107.9 hours in May, equating to a 24.9-hour workweek. Small-business employees worked an average of 108.1 hours in April, down from 109.8 hours, according to the revised figures.

"As small-business employers react to economic pressures driven by such factors as rising gas prices and natural disasters, we see the job market soften," Woodward says. "Employers cut back on employee hours when they have less work for people to do."

Small-business employees took home average monthly pay of $2,624 in May, 0.14% lower than revised April average monthly pay of $2,628. May wages equate to about $31,500 per year, which is part-time work for many small-business employees, Intuit says.

About 65% of small-business employees are hourly. Just 27% worked more than 140 hours for the month in April.

"With small businesses assigning fewer hours to employees, average monthly pay declines too," Woodward says. "Again, we see small businesses absorbing the shock of major events like natural disasters."

The index also showed that small-business employment in the "East South Central" part of the U.S. declined 0.1% in May, likely from severe flooding along the Mississippi River. The region was the only part of the U.S. showing small-business job losses, according to Intuit, while eemployment in the "Mountain" region of the U.S. rose 0.9% in May, the highest percent change in employment of all nine regions.

The monthly ADP (ADP) National Employment Report measuring changes in the private sector will be released Wednesday.

-- Written by Laurie Kulikowski in New York.

To follow Laurie Kulikowski on Twitter, go to: http://twitter.com/#!/LKulikowski

To submit a news tip, send an email to: tips@thestreet.com.

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Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

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