The Big Payoff The trend in SMB hiring is pointing to long-term quality over short-term quantity.

Small businesses hired fewer people but paid them more at theend of 2005, reversing a trend in the SurePayroll HiringIndex that lasted more than a year. "We've seen ashift in the data," says Michael Alter, president of Skokie,Illinois-based payroll service SurePayroll. "There have beenthree down months of hiring, and [for] five of the last six months,salaries have been rising."

In November, the nationwide hiring index reflected a downtrendthat began in September and negated most of the gains brought aboutby the slow expansion of small-business hiring during the firstpart of the year. Indications were the year would end with a meager0.3 percent increase in the number of people on small-businesspayrolls, based on a count of paychecks issued to SurePayroll's15,000 small-business customers.

As hiring dropped slightly, salaries went the other way.SurePayroll's Pay Index rose five of the past six months priorto December, partially undoing a drastic fall in small-businesssalaries that began in 2004. Small-business salaries across thenation averaged $28,888 annually. That was down 1.28 percent for2005, but much better than 2004's 4.4 percent slide.