While the Trump administration continues to tout its deregulation initiatives, the CEO of the second-largest payroll processor in the US, Paychex (PAYX), said he is seeing signs of increased regulations at local levels.
“The real interesting point that’s going on from a regulation and compliance standpoint is that the states are changing more regulations themselves than the federal government,” Paychex CEO Marty Mucci told Yahoo Finance.
Mucci explained that individual states are setting their own overtime legislation, minimum wage rates and family leave policies.
“We are seeing increased demand for HR compliance,” Mucci said. “For a small business that is in three different states, different regulations in different states have become complicated.
In its first-quarter report, Paychex saw a 7% increase in revenue for human resources services.
These increased regulations are coming with wage growth across Paychex’s small business clients, Mucci said, which often leads the way for employment trends.
“We’re seeing consistently that the wage increase year-over-year across the country on average has been very close to 3% up from 2%,” Mucci said. “We’re getting closer to full employment, so you’re seeing a scarcity of resources. Plus you’re seeing minimum wage increases take effect. And then I think with a bit more optimism that seems to be out there from consumers, businesses are able to take more price. If they can increase price, they can increase wages.”
Overall, Mucci said that he sees the labor market as healthy, despite temporary disruption from Hurricanes Irma and Maria.
“We saw a dramatic drop in hours worked in Florida and the Houston area — which we expected — and now we’ll have to see this month how well they bounce back,” Mucci said. “Overall we see the job market as healthy with steady growth on the top line and an uptick in wages.”
Nicole Sinclair is markets correspondent at Yahoo Finance
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