[Gene Marks, host]
Hey, everybody, it's Gene Marks and welcome back to another episode of the Paychex THRIVE Week in Review podcast. This is where we take a few news items during the week and we talk a little bit about them and how they impact your small or mid-sized business.
Before we do, just a reminder: If you'd like some tips or advice or help in running your business, if you'd like to get some prior links to additions of our Week in Review or our THRIVE podcast, please sign up for our Paychex newsletter. Go to paychex.com/thrive. So, okay, let's go to the news for this week.
The first news comes from the National Federation of Independent Small Businesses. They put out their monthly NFIB Small Business Optimism survey. I actually follow it every month. I'm not big on sort of surveys of optimism or confidence that are around there because they can really be sort of discretionary. But you know, the NFIB has been doing this for like something like 50 years. They have a pretty good methodology behind it. So, I do put a little bit of weight when I read this survey every month.
The results are not good. Small-business optimism among the people they surveyed has fallen to their lowest levels since 2012. The headline is that the index fell to something called 88.5 on the scale. Now, anything below 100 is not optimistic. Anything above 100 is optimistic. This was 88.5. It was the lowest level that was recorded since 2012.
The latest reading was worse than the forecast and it was the 27th straight month that the index has been below an average of 98 – 27 straight months. According to Bill Dunkelberg, who is the NFIB's chief economist, he says, “Small business optimism has reached the lowest level since 2012 as owners continue to manage numerous economic headwinds. Inflation has once again, of course, been reported as the top business problem on Main Street, and the labor market has only eased slightly.”
So, maybe you're seeing the same thing. I mean, I know that you know growth is still happening. I know unemployment is still low. But for most of the small-business owners that I talked to, they are grappling with much higher costs than just two or three years ago. Inflation continues to be sticky. The producer price index continues to be sticky, as well. It is, you know, we're in a higher-cost environment and, of course, finding good people is also an interest, as well. All of this is adding up to why the levels of small business confidence are as low as they are. Their optimism is low.
So, you know, will this turn around sometime this year? We will see, but you know right now it's still a challenging environment running a business. And, so, if you feel that it's challenging running your business, you're certainly not alone, and this survey from the NFIB certainly backs you up in that.
The next news is from HRdive.com, and they are reporting on new overtime rules which are going to affect your business and mine. There is a final overtime rule, it has now cleared the White House review. So, let me tell you some details about this, okay?
The U.S. Department of Labor's final rule, updating the standard by which some workers may be excluded or included from overtime pay, has cleared a review by the White House. The details have not been made public, but the Department of Labor last year proposed to increase the minimum annual salary threshold that determines overtime pay eligibility from $35,568 a year to $55,068 a year. If adopted as proposed, the rule would provide for automatic future updates to the threshold every three years.
This exemption applies to workers employed as bona fide executives, administrative people, professionals, and outside sales employees, as well as some computer employees. These people would be exempted from this.
But for the most part, if you are classifying people as a salaried worker and they are not supervising anybody, they have certain titles, there's certain other things about their job, and if they're making more than $35,568 right now, you don't have to pay them overtime.
But this new rule, which again has been cleared by the White House and we'll talk about when it will go in effect in a minute, but now that increases it to $55,068, which means that the same employees, again, they're not supervising anybody, they're salaried workers, other things – a part of the job that you're gonna have to check out. Now, if they're making up to $55,068, you're going to have to pay them overtime for any hour worked over 40 hours in a week.
And I got an issue. You can't ignore this. You cannot ignore this because your employees, they've got the Internet, too, and when this rule does become effective – and we still don't know the time when it will become effective, but I'm expecting sometime this year, most likely during the summer months – it will impact a lot of businesses.
So, what do you do to prepare yourself? You need to talk to your payroll experts, your HR experts. Maybe it's your labor attorney. Maybe you already use Paychex as your payroll service provider. You need to be talking to your experts, making sure that you look at all the classifications of all your workers, particularly your salaried workers, make sure who qualifies under this new overtime rule that would be qualified for new overtime pay, and then you've got to figure out how you're gonna pay for that.
Maybe you turn them into an hourly worker. Maybe you bump up their salary, or maybe you just have strict rules that say you are not allowed to work more than 40 hours a week. But you gotta be all over this. The White House is now approved this increase to overtime wages and it's gonna come, and I think it will come sometime this summer.
Finally, a new study has found that women-owned businesses thrive in Western states. This is an honor of Women's History Month. The financial services firm Lendio, they released a study identifying the best states for women-owned small businesses. The top states were mainly concentrated in the West with Washington and Colorado taking spots one and two, Delaware and Maryland were the only two non-Western states that made the top 10.
Now, what did they analyze, Lendio? They analyzed seven metrics that determined the best states for women entrepreneurs, including things like a share of employer businesses owned by women, percentage of female-owned businesses that earn a revenue of a million dollars or more, the percentage of patents filed by women in that state, and the growth in number of women-owned businesses. Data was collected from multiple sources, according to Lendio, that included the U.S. Census Bureau and the Bureau of Labor Statistics.
By the way, the top 10 list also included Washington, Colorado, Delaware, Oregon, California, Utah, Maryland, Arizona, Hawai’i, and Wyoming. These are the states that is best to be a woman business owner.
Brock Blake, who is the CEO of Lendio, here's what he said. He said, “Women entrepreneurs are key drivers of the U.S. economy, employing 10 million workers and generating $3.9 trillion in revenue.” Blake, I know Brock by the way, he's a good guy, said that the rapid growth of women-owned small businesses over the last few years is “encouraging”, but he says we know there is still work to do.
Access to capital is critical for small businesses to survive and grow, but in 2023, women only received 28.4% of the dollars offered in SBA loans. Process improvements and advancements in loan underwriting technology are critical to improving equitable access to capital.
So, bottom line is, the Western states, eight out of 10 of them, those are like best for women to run businesses, and women are clearly significantly growing in business ownership around the country, which is just great. But as CEO Brock Blake of Lendio says, there's still some challenges to make it more equitable for women to receive capital. But interesting news from Lendio this week.
Okay, so in recap, the National Federation of Independent Businesses – not great news. Small business optimism fell to their lowest level since 2012. Also coming out of Washington, the White House has approved the Department of Labor's new rules regarding overtime pay. We're going to be paying more in overtime. Talk to your HR executive, your HR advisors, Paychex, your HR attorney, your labor attorney. Find out what workers may be classified that are going to require you to pay them more overtime this year and be prepared. And finally, if you're a woman entrepreneur, go West, young lady. Head to the West where you can open up your own business. It is the best states out West, eight out of 10 of them for women entrepreneurs, although there is still ways to go to make things more equitable on the financing side for women entrepreneurs.
My name is Gene Marks and you have been watching or maybe just listening to the Week in Review podcast, a Paychex THRIVE podcast. Thanks for joining me again.
If you want some tips or advice, want to see some old episodes of our podcast, please sign up for our Paychex newsletter. It's paychex.com/thrive. Thank you for joining me this week. We'll see you again next week.
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