Small Business Economy News: The Main Street Health Report

About the data: The Main Street Health Report is based on data from more than 100,000 small businesses and 2 million hourly employees who use Homebase.

May 2026

Heading into summer, small businesses are busy, but careful. The clearest sign: they're giving the teams they already have more hours instead of hiring more people. In Homebase data looking at more than 100,000 small businesses and 2 million hourly employees, the number of employees working barely moved in May (up 0.2%), while hours worked rose 1.2%. That gap is the whole story this month. Main Street is meeting seasonal demand by stretching its existing staff, not by growing its roster. It’s a sign owners are optimistic enough to schedule more shifts, but not yet ready to take on the cost and risk of new hires.

When businesses add hours instead of roles, fewer new jobs get created, even in a month when the calendar says hiring should be picking up. For workers, that means more hours available this summer but a tighter door to new opportunities. For owners, it's a familiar play: lean on the people you trust before you expand. And for anyone reading the economy, it's a reminder that Main Street is recovering narrowly and cautiously, not broadly.

Is hiring up? Yes, but it's a seasonal ramp, not a breakout

Hiring did rise, up 6.6% month-over-month, a touch ahead of last May's 6.3% and well above the 2.6% of May 2024. But the more useful number is jobs added location, which is still below last year. 

This bump is mostly seasonal summer help, not businesses deciding to grow. Turnover tracked alongside it, with jobs archived rising 4.0%, pointing to a labor market that's simply getting more active as summer nears. People are changing jobs again; that's normal for the season.

What's happening to pay? Raises are still real, just thinner

Average hourly wages hit a new high in May at 44.0% above their January 2022 level. But the trend that matters for workers is the slowdown. Year-over-year wage growth has cooled to 5.9%, down from 7.1% a year ago and 10.6% two years ago. In other words, most hourly workers are still getting a raise, just a smaller one than they're used to. Pay also depends heavily on the kind of work — Healthcare leads at $20.73 an hour, while Professional Services has flattened near $17.98 since February. 

Where's the growth, and where isn't it? A narrow, split recovery

The recovery is real but lopsided. Summer-leisure sectors are carrying it, with Entertainment growing 7.0% as festivals, recreation, and warm-weather venues spin up. Hospitality (+2.3%) and Home & Repair (+2.2%) are close behind. Meanwhile, the everyday service businesses contracted. Beauty & Wellness (-3.7%), Medical/Veterinary (-2.5%), and Caregiving (-1.0%). If the businesses tied to summer fun are hiring while the ones you visit year-round are not, that's the definition of a narrow recovery.

Regionally, the pullback was broad. Open businesses declined in every region, led by the Southeast (-2.6%) and Southwest (-2.4%); the Midwest (-0.2%) and Northeast (-0.8%) held up best. No region was immune, which is more evidence that owners everywhere are being deliberate about when to expand.

What we're watching next month

The single thing to watch is whether that hours-vs-headcount gap closes. If owners start turning longer hours into actual new hires, the seasonal ramp becomes real growth. If they don't, it tells us the caution is sticking. We'll also be watching whether the sector split narrows as summer peaks. For now, the takeaway is simple: small businesses are busy, but careful, adding shifts before they add people, and watching every dollar on the way into summer.