Optimism Wanes But SMB Health Solid, Burnout on Rise, States Step Up AI Laws

Hey everybody, it's Gene Marks, and welcome to this week's episode of the Paychex Thrive Week in Review. This is where we take a few items from the news, and we talk about them because they impact your small business and mine. So, let's get started.

The first news item comes from the National Federation of Independent Businesses. They recently reported that small business optimism declined across the construction, manufacturing, retail, and service sectors during the second quarter of 2026.

Construction remained the most optimistic industry while retail posted the weakest outlook. Business owners expressed concern about future economic conditions, weaker sales expectations, and whether it's a good time to expand. Supply chain disruptions remain widespread, affecting nearly two-thirds of surveyed firms, although most owners still rated the overall health of their businesses as good or excellent.

The survey suggests that many entrepreneurs remain resilient but are becoming more cautious as inflation, labor challenges, and economic uncertainty continue to pressure operations and growth plans.

You know, I'm not a big fan of surveys, although I do like the NFIB survey, and I do have to admit that with all the speaking that I do across the country, all the business owners I speak to as well, that pretty much dovetails with what I am hearing. I mean, most companies feel, themselves, that they are in fairly good financial condition, but they are not without their challenges. And in 2026, those challenges are inflation and supply chain and labor challenges and economic uncertainty, which by the way, I think if you looked at 2016, they were a lot of them were the same challenges, as well as 2006. And every year there's different challenges.

The good news is, I think from this is that most small businesses still rated the overall health of their companies as good or excellent. So, there will always be challenges, but it's good to hear that small businesses, for the most part according to the NFIB, are doing okay.

The next bit of news comes on the HR Digest. There is an article that examined how a new Glassdoor workplace data survey showed that employee confidence has fallen to record lows while burnout concerns continue to rise. According to the survey from Glassdoor, workers are increasingly worried about job security, career advancement opportunities, and the broader economic environment.

The report notes that employees are feeling squeezed by heavier workloads, persistent uncertainty, and limited confidence in leadership. That's us, by the way.

At the same time, many organizations are struggling to maintain engagement as workers report declining satisfaction and motivation. The findings highlight a growing challenge for employers, retaining talent and sustaining productivity while addressing employee well-being. The article argues that companies that invest in communication, flexibility, and workforce support may be better positioned to combat burnout and rebuild trust among their employees.

One of the biggest advantages, I think, of working for a small business is that we can fix those problems. For employees that work at larger companies, I realize there is perhaps more compensation involved. I get that. But with a small business we can address some of these things. I mean, worker burnout, job security, advancement opportunities, feelings if you're making a difference. Those are just some of the benefits that you get when you work for a small company.

So, even though we are facing labor uncertainty and challenges in finding or retaining good workers, I think the small businesses themselves – you and me – I think we have a lot to offer to employees who are looking to make a difference, want flexibility and want to work closely and be heard and seen because of their job. I think a lot of that, I think a lot of small businesses can address the issue of burnout and sinking confidence that the Glassdoor survey reported on.

All right, here's a number I keep coming back to: 300 to 400 hours a year. That's how much time AI can save a small business owner on admin work alone. But you have to know where to start, and that's exactly why I love this new webinar series from Paychex called Paychex AI for Small Business, a Practical Guide that walks you through putting AI to work in your business. Five episodes, 30 minutes each, completely free.

Register, again, that's go to go.paychex.com/AIWebinarSeries. That's G-O dot paychex.com forward slash AI-W-E-B-I-N-A-R-Series. There you will find your five webinars that you can watch for this new thing that's coming up in this month. It will benefit your business in a big way If you have any questions, we're going to include a URL in the show notes.

Now, speaking of AI, it's time for this week's AI news, and it has to do with AI state laws. This is from a law firm called Akin Gump Strauss Hauer and Feld. They warned employers that rapidly expanding collection of state AI regulations is creating a complex compliance landscape.

States including Connecticut, Colorado, Illinois, California, and New York are adopting different requirements governing AI-driven employment decisions, discrimination risk, transparency, audits, and employee notifications. Connecticut's new framework is highlighted as one of the most comprehensive with phased implementation beginning in October of this year and additional disclosure requirements taking effect in 2027.

The authors caution that employers using AI for hiring, performance management, or workforce decisions should not assume federal standards will preempt state laws. Instead, companies should review their AI tools, conduct bias assessments, strengthen governance procedures, and prepare for varying compliance obligations across jurisdiction.

Now, again, the states leading this are Connecticut, Colorado, Illinois, California, and New York. If your business is located in that state or if you are searching for employees in that state or if you have any operations in that state, I strongly suggest that you contact your HR provider – maybe it's Paychex or maybe you're working with a labor attorney. Make sure that if you're using any AI tools in the recruitment and workforce management aspects of your business that they are in compliance with these new state laws that are coming out now.

Remember, these state laws, they supersede any kind of federal [law] that may or might not be on the books.

You've been watching and listening to the Paychex Thrive Week in Review podcast. My name is Gene Marks, and I hope some of this news and some of my thoughts on it help you to run your business.

Three things; Subscribe to this podcast on your favorite podcast platform or on YouTube. In addition to that if you need any help or tips or advice in running your business get our Paychex Thrive newsletter. Go to paychex.com/thrive, and I hope you'll come to our AI webinar series all designed to help you use AI better in your business. Go to go.paychex.com/AIWebinarSeries and you will find you will find great information there. There is a link in the show notes to take you to where you need to go.

Thanks again for watching or listening. We'll be back next week with some more news that impacts your small business in mind. Take care.

Do you have a topic or a guest that you would like to hear on THRIVE? Please let us know. Visit payx.me/thrivetopics and send us your ideas or matters of interest. Also, if your business is looking to simplify your HR payroll benefits or insurance services, see how Paychex can help. Visit the resource hub at paychex.com/worx. That's W-O-R-X. Paychex can help manage those complexities while you focus on all the ways you want your business to thrive.

I'm your host, Gene Marks, and thanks for joining us.

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