In a Friday interview with CNBC’s Jim Cramer, Paychex Chief executive John Gibson said he was fairly positive about the small business labor market and saw no signs of an imminent recession.
“What we continue to see is modest growth, with solid small business workforce growth, but not as strong as last year,” Gibson said. “And what I continue to see is small businesses trying to control costs.”
Paychex provides payroll, human resources, and other services for small and medium-sized businesses. When the company released its results Friday morning, the company reported strong increases in sales and bottom line profits, prompting management to raise the midpoint of its full-year profit forecast. However, Paychex also steered its earnings toward the lower end of estimates.
Shares fell during trading on Friday, with shares closing 1.72% lower.
Mr Gibson said Paychex’s Small Business Employment Index will be “relatively stable” in 2025 and “wage inflation will remain moderate”. However, he continued, they face ongoing challenges finding qualified employees, especially in smaller markets.
Gibson said many of Paychex’s customers aren’t buying as many “ancillary products” as the company expected to control costs. But he offered an optimistic outlook for 2026, citing clarity on tax policy and the possibility of further interest rate cuts from the Federal Reserve.
Gibson dismissed concerns that advances in artificial intelligence technology would lead to mass unemployment, suggesting that “technology doesn’t destroy jobs, it evolves them.” However, he argued that Paychex is less exposed to AI risks than other companies due to the nature of its customers.
“If something like this were to happen — I don’t think it would, but if it did — 70 percent of our customers are blue-collar and gray-collar workers,” Gibson said. “Think plumbers, electricians, restaurants.”
