OnPay Founder & CEO Jesse Burgess discusses what small and midsize businesses are seeing in payroll, hiring, wages and the practical realities of becoming an employer.
You’ve seen the payroll industry evolve from your grandfather’s business to building OnPay into the company it is today. What’s changed most about how small businesses manage their employees, and what challenges have remained the same?
What’s remained consistent is that small business owners are experts in their respective fields, but it can be difficult to be an expert in every area of running a business. They may be focused on securing customers, managing operations and keeping the business moving, but they’re still responsible for the same compliance requirements and administrative tasks as much larger companies.
What’s changed is the availability of technology that can help shoulder some of that responsibility. Platforms like OnPay give businesses simple and intuitive workflows for payroll, record keeping, hiring, onboarding and offboarding, helping owners manage those complexities while staying focused on growing their businesses.
There’s been a lot of uncertainty around hiring and the wider economy. From what you’re seeing across small and midsize businesses, are employers becoming more cautious about taking on new staff?
We’ve seen some fluctuations in our customers’ payrolls over the past six months. There was a three-month period when the number of active employees included in pay runs decreased slightly, likely due to layoffs, but we’ve seen an uptick again over the last 30 to 45 days. Some of that activity is attributable to normal seasonal behavior.
Employment has been relatively steady across many of the industries we serve, including healthcare, technology and professional services. However, we are seeing some headwinds, particularly during September and October.
“I think employers are still hiring, but they’re being more mindful of what they can afford to pay.”
Jesse Burgess, Founder & CEO, OnPay
There’s still work to be done, and businesses are bringing on employees to meet those needs, but inflationary pressures and rising operating expenses are limiting wage growth.
The job market also looks different than it did three years ago. The competition for talent isn’t what it was in 2021 and 2022, when we saw much more extreme wage growth. Businesses today are contending with a different hiring environment while trying to manage increasing costs.
Payroll data can often reveal changes in employment before they become obvious in the wider jobs figures. What trends should recruiters and HR professionals be paying attention to when it comes to wages, working hours and hiring activity?
One trend worth watching is the relationship between wage growth and inflation. What we’re seeing across our customers is that wage growth is generally lagging inflation, and I wouldn’t be surprised to see that continue over the next five months, particularly with energy and food prices expected to climb through the first quarter.
There are pockets of extreme wage growth, especially in parts of the technology industry where competition for certain types of talent remains high as AI grows. But that’s not reflective of the wider market.
It’s important to look at these trends over time rather than draw conclusions from a single jobs report. The broader trend lines provide a more useful picture of what’s happening across small businesses.
For many smaller businesses, hiring their first employee is a significant milestone. What are the biggest challenges founders face when moving from running a business themselves to becoming an employer?
One of the biggest challenges is understanding all the responsibilities that come with employing someone else. Small business owners are often experts in their particular fields, but they may not have experience with payroll, payroll taxes or the administrative requirements that come with hiring.
For example, new employers may not be familiar with the deposit schedules they’re responsible for when paying employees. They also need to understand their tax obligations, obtain the appropriate ID numbers and make sure they’re setting aside the funds for payroll tax deposits.
There’s a learning curve, and the consequences of mistakes can be substantial. Even though a small business might not have a dedicated payroll clerk or HR department, it still has many of the same compliance responsibilities as a larger organization.
That’s why having the right tools matters. We guide business owners through those requirements and potential pitfalls, specifically when they’re processing their first payroll, so their employees get paid correctly and they can focus on running their businesses.
AI and automation are transforming payroll and HR technology, but employees still want reassurance that there’s a real person behind their pay. How can businesses balance automation with the human support employees expect?
AI and automation can be helpful, but there needs to be a strong sense of accountability in payroll. There are real consequences when something goes wrong, so customers need the ability to speak with an expert or someone who can take responsibility for providing correct answers.
“Small business owners are looking for a human being who understands their questions and can guide them through the process.”
Jesse Burgess, Founder & CEO, OnPay
That doesn’t mean AI can’t play a role in the stack. There are opportunities to use AI tools and automation to augment certain actions and improve customer experience. But there should still be a team of experts working directly with customers or overseeing those automated experiences.
Generally speaking, small business owners are looking for a human being who understands their questions and can guide them through the process. They want to know that someone is accountable for making sure their questions are properly answered.
Rising employment costs are putting pressure on businesses. What practical steps can smaller employers take to manage payroll costs without compromising their ability to attract and retain good people?
The rising cost of employee benefits, healthcare premiums specifically, is a common pain point we’re hearing from customers. For small businesses, competing with larger, more established companies for senior-level employees can be difficult when those larger organizations have more resources to offer comprehensive benefits packages.
What we’re seeing is small businesses aren’t outright eliminating benefits altogether. They’re changing the mix of what they offer. For example, some employers are shifting a greater share of costs from the employer to the employee or reducing certain levels of coverage while keeping policies in place.
For growing businesses, offering benefits can also be a gradual process. An employer might not be able to afford health insurance immediately but could start by offering dental and vision coverage or a 401(k), eventually adding health coverage as the business grows.
It’s about finding the right balance between offering a competitive package and keeping costs manageable.
Looking ahead to 2027, what do you think will be the biggest challenges and opportunities for small-business hiring, and what should employers be preparing for now?
I think the small-business hiring metrics we saw in 2026 will continue into 2027. Businesses will continue hiring, especially as companies that have recently started reach the point where they need additional employees to support their growth.
One area where there may be a disconnect between expectations and reality is AI. There’s a lot of media conversation about how AI is going to disrupt the workforce, but I don’t believe 2027 will be the year of complete AI disruption for small businesses.
That’s not to say the impact won’t eventually be felt. AI is steadily targeting the intellectual components of jobs, including sales and customer support processes. If those functions become automated, there are important questions that employers will need to answer about where displaced workers will go and what opportunities will be available to them.
For smaller businesses, those challenges could be significant because they often have fewer internal opportunities to transfer employees into different roles and fewer safety nets when someone is offboarded.
I think those workforce questions will become louder over time, but my expectation is that the biggest impacts won’t be felt in 2027.
About Jesse Burgess
Jesse Burgess has worn nearly every hat in the payroll industry. After joining his family’s traditional payroll business in 2007, he saw early on the opportunity to leverage technology to serve clients more efficiently, reduce errors, and provide a better experience. He set out to build OnPay — a modern, cloud-based platform to simplify payroll, HR, and benefits for small business owners and accountants. As OnPay’s Founder and CEO, Jesse has been at the forefront of the company’s vision, strategic growth, and product direction for over a decade.
