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Small business job growth lagged in July

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The hiring pace at small businesses dropped slightly in July, payroll processor Paychex reported Tuesday, but wage growth remained consistent.

The Paychex Small Business Employment Watch indicated that hourly earnings growth for U.S. workers in businesses with fewer than 50 employees has held steady since May, reporting 3.16% growth in July, but weekly earnings growth remained below 3% for the sixth month in a row. 

The Small Business Jobs Index has averaged moderate employment gains (100.44) through seven months of 2024, but the July reading fell below 100 to 99.87. Still, the majority of states did report an index level above 100 in July, but others are driving the national index to trend downward.

“We’ve been seeing decelerating growth, but growth,” said Frank Fiorille, Paychex vice president of risk, compliance and data analytics. “This is the first month in a very, very long time that the index did print a number of under 100, which is a barometer to say that small businesses now are not adding employees. But you can have some noise in those one-month numbers. If you look at the past six or seven months, the index is still above 100. It’s still showing some pretty decent growth.”

Paychex office

The top four states for small business employment growth in July are all in the Midwest (Indiana, Michigan, Missouri and Ohio). But employment growth in California fell again in July to 98.74, indicating more significant year-over-year job losses.

“The number itself is a little weak, but overall the majority of states are still reporting growth, which is another positive thing to see,” said Fiorille.  “California continues to be a laggard and report really soft numbers, and then New York is in that lower quintile too.”  

At 2.87%, weekly earnings growth has trended just below 3% for the past six months. Weekly hours worked growth (-0.20%) remained negative year-over-year for the 16th consecutive month.

“The other thing that we’ve been consistently seeing is wages continue to have pretty soft numbers, 3.16 on the average hourly earnings,” said Fiorille.

The construction sector had the largest one-month change among industries, down 0.67 percentage points to an index level of 99.77 in July, yet it continued to lead growth among sectors in hourly earnings (3.84%), weekly earnings (3.79%), and weekly hours worked (0.16%) for the ninth consecutive month. Education and health services (102.04) remained the top industry for small-business employment growth in July, yet reports the weakest hourly earnings growth at 2.67%.

As for what accountants should tell their small business clients to watch for, Fiorille pointed to the upcoming election and the fate of expiring tax provisions from the Tax Cuts and Jobs Act. “Next year is really the year of taxes, and what that’s going to mean not just for businesses, but consumers as well,” said Fiorille, “We’re going to watch it really closely. It can really change the landscape of things.”

He noted that Senate Majority Leader Chuck Schumer, D-New York, wants to bring up the tax extenders bill that has been stalled in the Senate ever since it was passed at the end of January in the House. It would extend provisions, such as research and development expensing, 100% bonus depreciation, interest expensing, an expanded Child Tax Credit, disaster tax relief, improvements in the Low Income Housing Tax Credit, a tax agreement with Taiwan, and an end to the fraud-plagued Employee Retention Credit.

“Our assessment is it’s not going to go anywhere, but he just wants to get the Republicans to go on record not voting for it,” said Fiorille. 

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Accountants on IRS and PwC layoffs, accounting students and more

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Complimentary Access Pill

Enjoy complimentary access to top ideas and insights — selected by our editors.

This week’s stats focus in part on the job titles seeing the greatest losses at the IRS during layoffs; as well as the states that have proposed or passed alternatives to the 150-hour rule; the percentage of master’s in accounting program applicants since 2020; the number of PwC employees laid off in May; the projected size of Deloitte’s new New York City headquarters; and the amount of 2026 HSA annual contribution limits, depending on coverage.

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CrowdStrike says DOJ, SEC sent inquiries on firm accounting

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CrowdStrike Holdings Inc. said U.S. officials have asked for information related to the accounting of deals it’s made with some customers and said the cybersecurity firm is cooperating with the inquiry.

The Austin, Texas-based company said in a filing Wednesday that it has gotten “requests for information” from the U.S. Department of Justice and the Securities and Exchange Commission “relating to the company’s recognition of revenue and reporting of ARR for transactions with certain customers.” ARR refers to annual recurring revenue, a measure of earnings from subscriptions.

The company said the federal officials have also sought information related to a CrowdStrike update last year that crashed Windows operating systems around the world.

“The company is cooperating and providing information in response to these requests,” the filing states.

U.S. prosecutors and regulators have been investigating a $32 million deal between CrowdStrike and a technology distributor, Carahsoft Technology Corp., to provide cybersecurity tools to the Internal Revenue Service, Bloomberg News first reported in February. The IRS never purchased or received the products, Bloomberg News earlier reported.

The investigators are probing what senior CrowdStrike executives may have known about the $32 million deal and are examining other transactions made by the cybersecurity firm, Bloomberg News reported in May.

Asked for comment about the filing, CrowdStrike spokesperson Brian Merrill said, “As we have told Bloomberg repeatedly, this is old news and we stand by the accounting of the transaction.” 

A lawyer for Carahsoft previously declined to comment on the federal investigations, and representatives didn’t respond to subsequent requests for comment about them.

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Elon Musk urges Americans take action to ‘kill’ Trump tax cut bill

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Tech titan Elon Musk ratcheted up his offensive against Donald Trump’s signature tax bill on Wednesday, urging that Americans contact their lawmakers to “KILL” the legislation.

“Call your Senator, Call your Congressman,” Musk wrote in a social media post. “Bankrupting America is NOT ok!”

The post came one day after Musk lashed out at the tax bill, describing it as a budget-busting “disgusting abomination” as Republican fiscal hawks stepped up criticism of the massive fiscal package. 

Trump hasn’t publicly responded to Musk’s comments, but the White House put out a statement Wednesday saying the legislation “unleashes an era of unprecedented economic growth.” 

And House Speaker Mike Johnson told reporters that Musk is “dead wrong” about the bill and that the tax cuts will pay for themselves through economic growth.

Musk’s public condemnation pits him against the president at a critical time as Trump is personally lobbying holdouts on the bill. His campaign against the legislation threatens to stiffen resistance and delay enactment of the tax cuts and debt ceiling increase. 

Musk has attacked the legislation days after leaving a temporary assignment leading the administration’s Department of Government Efficiency initiative to cut federal spending. The Tesla Inc. chief executive officer’s high-profile role in the Trump administration eroded his business brand and sales of his company’s electric vehicles plunged. 

The House-passed version of the tax and spending bill would add $2.4 trillion to U.S. budget deficits over the next decade, according to an estimate released Wednesday from the nonpartisan Congressional Budget Office.

The CBO’s calculation reflects a $3.67 trillion decrease in expected revenues and a $1.25 trillion decline in spending over the decade through 2034, relative to baseline projections. The score doesn’t account for any potential boost to the economy from the bill, which Johnson and Trump argue would offset the revenue losses. 

Musk, the world’s richest man with a net worth of about $377 billion according to the Bloomberg Billionaires Index, has become a crucial financial backer of the Republican party. After making modest donations most years, Musk became the biggest U.S. political donor in 2024, giving more than $290 million.

Johnson said Musk had promised to help reelect Republicans just a day before savaging Trump’s bill. Musk did not respond to a request for comment. 

Most of Musk’s giving was aimed at electing Trump but he also supported congressional candidates. America PAC, the super political action committee that Musk largely funded, spent $18.5 million in 17 separate House races. Though that total pales in comparison to the roughly $255 million he spent backing Trump, the spending means a lot in a congressional election, where challengers on average raise less than $1 million.

Control of the House will likely be decided by the outcome of fewer than two dozen close races in the 2026 midterm elections. The GOP’s chances of holding their majority would suffer a major blow if Musk were to withdraw his financial support.

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