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California’s small-business hiring was flat in the first quarter of the year, while the salaries rose on an annualized pace of 5.7% according to SurePayroll, an online payroll service with 18,000 small-business clients nationwide.

The size of the average small business in California increased by a very modest 0.15%. If this pace continues for the rest of the year, California small businesses are on track to grow by 0.6% in 2008. To put that in perspective, California small businesses grew by 6.6% in 2007.

Nationally, hiring is up 0.9% and average salary is down 0.1%. SurePayroll President Michael Adler attributes small businesses’ continued growth to the fact that the economic downturn hits specific industries, such as home construction and luxury goods and to the tendency of big companies to outsource work to small firms during tough times.

The average small-business paycheck in California increased 1.4% in the first quarter, on track to grow 5.7% for the year. In 2007, the average small business paycheck in California increased 7.2%.

According to SurePayroll data, the average small business salary in California currently is $37,096, and the average California small business has approximately six employees.

Despite small businesses’ continued growth, the owners optimism about the economy is waning. In March, 67.3% said they are optimistic, compared to 70.1% in February and January and 77.7% in December.

SurePayroll started its monthly index in 1994, based on the real hiring and payroll data of its 18,000 clients with fewer than 100 employees. Click here for more details about SurePayroll’s March report.

Copyright © 2008. Orange County Register.