Tennessee Regains Title for Small Business Hiring
Tennessee once again has become king among states for hiring among small businesses employing 50 or fewer employees.
The Volunteer State edged out Texas on Paychex|IHS Markit Small Business Employment Watch’s monthly index that measures a rolling 12-month change. But the lead is razor thin.
Tennessee came in at a rating of 101.33 compared to 101.32 for Texas. A rating over 100 means that each state is hiring at a pace that exceeds hiring in 2004, a year considered normal growth. Georgia and Arizona were above 100 as well.
When hiring is strong, businesses are expanding and need real estate whether its office, industrial or retail. And, according to the index, the leading category for hiring is "other services," a kind of catch-all that includes dry cleaning businesses, auto repair, personal care and even dating services. Those tend to be small businesses.
But finding the space to expand could be challenging. The hottest cities around the country tend to have low vacancy rates across the different types of property.
As a whole, small business hiring growth has flattened out so far this year and remains under 100 at 98.76. Paychex culls the data from 350,000 Paychex clients.
Difficulty competing with big companies for skilled talent also persists.
"According to our most recent research report, one way that employers can stand out to prospective hires is by focusing on employees’ desire for flexibility in when, where, and how they work," Martin Mucci, Paychex’s president and chief executive officer, said in a statement.
By taking the top spot in May, Tennessee returns to a place it had held at one point for 14 consecutive months starting in December 2016. It spent all of 2017 with the highest rating. Higher growth ebbed and flowed but Tennessee stayed two-to-four points above 100 until Texas broke the hold last February.
Tennessee would reach the top three more times, the last in June 2018, yet still holding the spot more than any other state during the year. The state's hiring growth dropped below the 100 mark a year ago and stayed that way until April, finishing second behind Texas.
Nashville’s hot economy over the past several years is perhaps the biggest factor in keeping Tennessee at the top of small business hiring for so long and getting the state back to the top in May. But the index doesn’t break Nashville out for the top cities for small business hiring. At about 1.9 million, its metro area isn’t among the 20 largest in the country.
Texas has two cities on that list – Dallas and Houston. Dallas finished at the top the Paychex|IHS Markit index for seventh consecutive month.
The energy sector is helping drive the Texas economy. But Dallas is attracting other types of business. Drug maker McKesson is moving its headquarters from San Francisco into the area, for instance.
Meanwhile, Nashville will continue to boost Tennessee as Amazon reaches its promised 5,000 employees with an operations center in a downtown building and financial firm AllianceBernstein completes its headquarters move from New York.
But space across the board is tight. Nashville has one of the lowest office vacancy rates in the country at 6.4%, according to CoStar data, less than half the national average. Retail space has 3% vacancy, tighter than the national average and the fourth lowest in the country.
