While the nation's small-business owners continued hiring new employees last month, many are scaling back salaries to deal with rising costs, payroll data shows.
In June, average annualized small-business salaries dropped by 0.4 percent to $32,386.11, according to SurePayroll, a Chicago-based payroll services firm.
Average salaries declined in every region except the West, where they rose by 0.7 percent. Since the start of the year, average salaries have shrunk by $223.
The West was also the only region where small businesses cut employment, which rose by an average 1.6 percent nationwide.
Despite modest job gains, June marked the fifth straight month in which small employers hired more independent contractors in order to reduce costs from payroll taxes and benefits. According to SurePayroll, there were 3.54 contractors for every 100 employees working for small businesses in June.
"Hiring full-time employees is like getting married," SurePayroll President Michael Alter said in a statement. "Hiring a contractor is like dating. There's less risk in making a big mistake when you are dating than when you tie the knot and get married," he said.