Unemployment Is Down, Proposed Bills to Help SMBs, AI Not Leading to Mass Layoffs

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 from this past week, and we talk a little bit about them because they impact your small business and mine.

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The first has to do with unemployment. The claims for unemployment benefits dropped to 196,000, the lowest since mid-July as layoffs remain low. New U.S. unemployment claims fell sharply – this is down from 206,000 the previous week, and the lowest level since mid-July.

The four-week moving average declined to 203,250, while economists had expected about 207,500 claims. Because unemployment filings are commonly used as an indicator of layoffs, the figures suggest that employers remain reluctant to cut workers. Claims have generally stayed in historically low range of roughly 200,000 to 300,000 during the past year.

Hiring, however, remains comparatively restrained. Employers have added an average of about 80,000 jobs per month in 2026, although August surprised on the upside with 162,000 new jobs. This is an improvement over 2025 but remains far below the average monthly gains recorded in 2023 and 2024.

Overall, the data depict the labor market characterized by low layoffs and relatively strong job security, but modest hiring growth.

Now, a couple things that I wanted to comment on. Hopefully you saw my interview with Kevin Hassett, who is the administration's chief economic policy advisor. When I asked about relying on government data, like unemployment data from the Department of Labor and things like that, he was as skeptical as I am, given their collection methods. And when I asked him, what government data does he rely on? Like what does he think really has a high level of reliability?

He actually pointed to these exact metrics, unemployment claims, and the reason he gave is because there's no surveys involved. You know, the federal government pulls together actual unemployment claims made physically in every single state around the country. So, when you see that unemployment claims have been, you know, at such a low level over the past 12 months, even the past 24 months, that does give a pretty good indication of a strong labor market, an even more reinforced indication than, say, the unemployment rate or you know, open jobs, and other things that are really kind of calculated by the Department of Labor on based on surveys.

So, I think that's good. Now, if you also follow this podcast, you listen to us, you know every month we report on the Paychex Small Business Employment Watch. That has shown that small business hiring has remained resilient, really, over the past couple of years. So, yeah, this labor dovetails, this number dovetails all in together, you know. Unemployment and employment still remains relatively strong. there is … the labor market is tight.

There is not a single client that I have that is looking to shed workers. They can't find enough workers to do the work that they gotta do. Even with the onset of AI and all the threats about eliminating jobs, I'm really not seeing that yet. I mean, not that it couldn't happen in the future, but right now, employers need people. People are very, very important, and whenever we talk, whenever … I was at a board meeting last week in Dallas with a trucking company, 300-person trucking company, and you know, their biggest issue is finding enough truckers. You know, it's people. It is still people. And that's why we're seeing that unemployment benefit claims remain low and employment itself remains fairly high.

So, it's good news. It's challenging news for us as business owners. We have to do what we gotta do to attract as many good workers as possible, provide good benefits, flexibility, but the labor market itself from an economic standpoint remains pretty strong.

Okay, next item of news comes from Washington, again. This is a press release from the House Committee on Small Business. The House Small Business Committee advanced nine bipartisan bills on Sept. 16 aimed at changing or strengthening several Small Business Administration programs. The proposals address access to capital, federal contracting, disaster assistance, manufacturing, cybersecurity, and foreign threats.

Among them, the Cybersecurity for Small Businesses Act would require the SBA to work with CISA and NIST – these are agencies of the government that provide security and technical support for businesses and consumers to provide cybersecurity resources, including information for government contractors. Another bill would create a centralized SBA website to help manufacturers reshore operations to the United States.

Two proposals affect the SBA's 504 loan program; one would allow its program limit to be increased by as much as 15% annually while another would streamline loan closings, revise leasing rules, and expand outreach.

Other bills address federal construction contract payments, disaster loan communications, SBIC performance reporting – that's the small business investment companies – and implementation of a GAO recommendation.

These bills cleared committee with bipartisan support. They have not yet become law. They do go to the Senate. My prediction is they will all become law because the Senate, as well as, you know, anybody sitting in the White House … everybody loves small business. Nobody's gonna have an issue with these bills and we're gonna see it.

And a couple of comments for you there. You know, as I've been speaking to groups around the country most recently, a logistics conference, a chemical distributors conference, and a steel foundry conference just in the past week, I've been I've been really urging the business owners in that conference just to go to the SBA website. The SBA has expanded loans and availabilities for manufacturers, which is is huge.

They also have their Make Onshoring Great Again portal, which can help you find domestic suppliers so that you can diversify your supply chain. And you know, I'm gonna add some of this to my presentation because these proposals are they, you know, they've only been recommended by the committee, but I really do expect them to become law. When that happens, I think it's gonna provide even more benefits to small businesses, most importantly, increasing the amount of loans that the SBA can guarantee and get issued to small businesses.

So, I do have to say, in a very politicized world that we're living right now, one, you know, sort of oasis of bipartisanship is the House Small Business Committee and the Senate Small Business Committee, too. Although the House Committee really meets quite frequently and is quite active. So, I do give a lot of hats off to them. Maybe, maybe we can get a couple of their members onto a future podcast episode to talk to them a little bit more about their activities.

Okay, in this week's AI news, Bank of America's CEO Brian Moynihan has said that AI is enabling banks, his bank, to grow while gradually reducing headcount without large-scale layoffs. The bank has roughly 130 to 150 AI use-cases operating across the company and provides AI tools to its approximately 209,000 employees.

Moynihan said Bank of America has spent roughly $400 million implementing AI initiatives that are producing an estimated $800 million in benefits, he says. Rather than cutting employees outright, the bank is using normal attrition and hiring fewer replacements as workers leave. Its approximately 18,000 programmers are already seeing productivity improvements of roughly 10% to 15% from AI. Moynihan said the strategy allows revenue to rise while employment gradually declines.

He also emphasizes controls. Employees remain responsible for AI-generated work, particularly in regulated or customer-facing activities. The plan, the bank plans to continue expanding AI applications and expects to roughly double its AI spending budget next year. That report, by the way, came from the Charlotte Business Journal.

You know, this is what I expect to see with AI over the next few years, and I think this will trickle down to small businesses too. I think a lot of companies, as they get better and better and come up with more use cases of AI in their businesses, they will be seeing productivity gains, and I think that will give them the reason to maybe let their employment decline by attrition. I mean, we have a much older workforce or people that are not stepping up to their jobs. And maybe, maybe hire a you know fewer people, which by the way, in my first you know, bit of news, I was telling you how tight the labor market is anyway.

I think AI, you know, could not have come at a better time. I think it's gonna provide a lot more benefits to businesses than we're even seeing right now, and I think for employees, good employees at companies, they're gonna embrace AI and use it really, really well, take advantage of these tools.

I don't think you're gonna be seeing these massive layoffs, or employees just everything becoming completely automated and computerized. I really do think that AI will work with humans to make people more productive.

Yes, will that you know make headcounts smaller? Ultimately, yeah, that's the case, but at the same time, there will be other opportunities, and I do believe that businesses, particularly small businesses again, who are desperate for workers, I don't think they're going to be cutting workers anytime soon. If they can get more out of their existing workers with AI, they definitely will, and I think that's what we'll be seeing.

My name is Gene Marks, and you have been watching this week's episode of the Paychex Thrive Week in Review. Remember, if you need any help or tips on running your business, sign up for our Paychex Thrive newsletter. Go to paychex.com/thrive. Follow us on YouTube or your favorite podcast platform.

And remember, if you would like some key metrics to see how you're really using HR to the extent possible, go to go.paychex.com/measure and you will learn more. I'm going to be visiting there myself.

Hey, thanks so much for watching or listening. It's been great. We will see you again next week with some more news and information that will help you run your business. Take care and we'll see then.

My name is Gene Marks, and you've been watching or listening to the Paychex Thrive Week in Review podcast. A few things to take away. First of all, if you are in need of HR or payroll help in your business, consider Paychex. Go to paychex.com/meetpaychex. That's P-A-Y-C-H-E-X.com forward slash M-E-E-T-P-A-Y-C-H-E-X. Please follow this podcast on your podcast platform or on YouTube if you are enjoying the content so you stay up to date on our latest episodes.

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Hope you found this information helpful. I'll be back with you next week with more news that impacts your small business and mine. My name is Gene Marks. Thanks so much for watching or listening. Take care.

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