Small Businesses Added 38,000 Jobs in October — And Starting Pay Rose Just 3.0%

Small businesses added 38,000 net new jobs in October, the ninth straight month of positive hiring, according to Gusto's October 2026 Small Business Jobs and Pay Report released November 3. Hiring rose for a second month in a row and posted its largest gain since July. But the number that may matter most to an owner with an open role is smaller: the pay offered to new hires rose only 3.0% from a year ago.

Here is where the hiring happened, what workers are earning, and how to use the data when you budget for 2027.

The headline numbers

Gusto reported 38,000 net new jobs in October on a seasonally adjusted basis. That is above the 12-month average of 34,000. Recent months, including revisions, look like this:

• June: +36,000
• July: +40,000
• August: +25,000, revised up from +18,500
• September: +27,000, revised down from +28,000
• October: +38,000

Nich Tremper, Senior Economist at Gusto, described the pace this way: "October was a step up in pace, but not quite a return to the pace we saw in spring." In plain terms, hiring is steady, not surging.

What workers earn: 3.9% growth, but 3.0% for new hires

Average hourly earnings in the report were $37.50, up 3.9% from a year earlier. September's figure was 4.0%. Across 2026, wage growth has ranged from about 3.9% to 4.6%.

The New Hire Pay Index, which tracks starting pay, was about $25.90 an hour, up 3.0% from last year. That gap between 3.9% for the existing workforce and 3.0% for new hires is useful to know. It suggests that, on average, entry pay is growing more slowly than the pay of people already on payroll.

A caution on comparisons: these are Gusto's figures for small-business payrolls. National government data, which covers employers of every size and uses different methods, reported a lower average hourly earnings gain of 3.1% for October. The two measures are not interchangeable, so use each for what it measures and compare like with like in your own market.

Which industries hired

Sixteen of 19 sectors added jobs. The biggest net gains were:

• Health care and social assistance: +13,000
• Professional, scientific and technical services: +5,500
• Construction: +3,800
• Other services: +2,600

Three sectors shed jobs, each by fewer than 300: mining, accommodation and food services, and management of companies. Those losses are tiny, but they are a reminder that restaurants and lodging are not part of this hiring story. If you run one, expect to compete for workers in a market where health care is doing much of the hiring.

Where hiring was strongest

The report breaks net hires and pay down by region:

• South: +13,000 jobs, with wage growth of about 3.9%.
• Midwest: +9,400 jobs, with 3.2% wage growth and average hourly earnings of $33.00, the lowest of the four regions.
• Northeast: +8,200 jobs, with 3.8% wage growth.
• West: +7,000 jobs, with 5.0% wage growth and average hourly earnings of $42.00, the highest.

The West added the fewest jobs but showed the fastest pay growth. That pairing can signal a tight market where employers pay more for each hire. The Midwest shows the opposite pattern: more jobs, slower raises, lower pay. The report covers regions, not individual states, so check local job postings before using these as a pay guide.

Mid-sized small businesses led

By company size, net hiring in October looked like this:

• 20 to 49 employees: +15,000
• 5 to 9 employees: +12,000
• 10 to 19 employees: +7,900
• 1 to 4 employees: +3,600

The smallest employers hired the least, which fits what many micro-business owners say about the cost and risk of a first or second hire. For them, the decision is as much about the cost of an extra person as about finding one.

What this means for your 2027 budget

Use the data as a benchmark, not a rule. Several practical moves follow.

1. Set your pay range from local postings, not national averages

The $25.90 new-hire figure is an average across industries and regions. Your actual market could be far above or below it. Look at what comparable local roles advertise, then decide where you want to land in that range.

2. Budget more than the wage

A paycheck is only part of the cost of a worker. Payroll taxes, workers' compensation, benefits and training add to the total. Before posting a role, put the full cost into your profit and loss statement and check whether the new revenue covers it within a few months.

3. Consider whether the need is ongoing or seasonal

If the work is temporary, extra hours for current staff or short-term coverage can avoid a long-term commitment. If it is constant, a permanent hire usually costs less than a string of overtime shifts.

4. Classify workers correctly

When hiring feels expensive, some owners reach for contractors. Classification rules are strict and differ by state, and mistakes can be costly. Our guide to independent contractor vs. employee explains the main tests.

5. Watch retention as closely as recruiting

If existing workers are getting raises of nearly 4% while starting pay grows 3.0%, a new hire may earn less than a peer who joined earlier. That can strain morale. Review pay for current staff when you set the pay for new ones.

What to watch next

Gusto's series has now shown nine consecutive months of positive hiring, but the monthly numbers are modest and get revised. Look at several months together rather than one report, and treat any single month as a snapshot. The next report will show whether October's step up in pace holds into the holiday season and the start of the year.

The bottom line

Small-business hiring is growing steadily, led by health care and by employers with 20 to 49 workers. Pay is rising faster for people already employed than for new hires, which gives owners some room on starting offers but little room to ignore their current team. Decide your 2027 hiring plan with your real costs in hand, and let local market data, not a national headline, set your number.

Source: Gusto Small Business Jobs and Pay Report for October 2026, released by Gusto, Inc. on November 3, 2026; U.S. Bureau of Labor Statistics October 2026 Employment Situation, as summarized by OneDigital.

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