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Recent data from a national payroll company that caters to small businesses indicates that small companies in North Carolina have gotten smaller in 2004, but their employees are taking more money home.
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According to data compiled by SurePayroll Inc. of Skokie, Ill., the size of the average U.S. small business has grown 2.5% while the size of the average paycheck has declined 3.3%. The numbers suggest more people are getting jobs at small businesses but the jobs are not paying as well as they did at the beginning of the year.

But in North Carolina, the data indicates the opposite trend. The average small N.C. business has shrunk by 2.8%, from 4.28 employees to 4.17 employees, according to SurePayroll's data. And average salaries at those companies have grown 3.6% to $26,220, up from $25,299.

Michael Alter, president of SurePayroll, says the trend could indicate a shift in who's getting hired, as certain industries shrink while higher-paying professionals in other industries are finding jobs.

The declining head count may reflect price pressures many small businesses are facing from competitors. Combined with an increased cost of in-state labor, that trend might not bode well for small businesses in North Carolina, he says.

"They may not be able to hire as many new employees and so they actually may be losing business to other states that can more cost-effectively compete," he says.

The firm's hiring index for the state, which started at a baseline of 10,000 in January, dropped to 9,741 at the end of September but has rebounded slightly from a low of 9,684 at the end of July. SurePayroll's national hiring index has steadily increased since January, climbing from 10,000 to 10,252.

The numbers are generated from actual payroll data, or paychecks issued to contractors and employees, from more than 13,000 small businesses nationwide. SurePayroll tracks data in states in which it has 100 or more clients.

Maggie Braun, director of Central Piedmont Community College's Small Business Center, says she is seeing steady traffic among people interested in starting their own businesses. Many of the would-be small-business owners have been downsized from corporate positions at Charlotte's financial-services companies, she says, and she anticipates that number will increase.

"I expect to see a whole flood of them in the next six months or so when Bank of America executes their plan" to cut workers nationwide, Braun says. In many case, she says, the first client for the new small-business owner is his or her former employer.

"It could indicate that some of the types of businesses that are getting started are requiring employees that are more highly skilled," she says of the increasing N.C. salary trend reflected in the data.

Copyright © 2004. Charlotte Business Journal.