In a Friday interview with CNBC’s Jim Cramer, Paychex CEO John Gibson was fairly positive about the labor market for smaller businesses, saying he doesn’t see signs of a looming recession.
“What we continue to see is moderation, that labor growth in small businesses is solid, but not as strong as it was last year,” Gibson said. “And the things that I continue to see [are] small businesses trying to manage their costs.”
Paychex offers payroll, HR and other services to small and medium-sized businesses. It posted a top and bottom line beat when it reported earnings Friday morning, and management raised the midpoint of its full-year earnings forecast. However, Paychex also guided revenue towards the lower end of its estimates.
The stock slipped during Friday’s session, and shares closed down 1.72%.
Paychex’s small business job index has been “relatively stable” in 2025, Gibson said, with “continued moderation in wage inflation.” But the small end of the market in particular is facing continued challenges finding qualified employees, he continued.
A lot of Paychex’s clients aren’t buying as many “ancillary products” as the company expected in an effort to manage costs, Gibson said. But he was optimistic about 2026, citing clarity on tax policy and the possibility of more interest rate cuts from the Federal Reserve.
Gibson brushed off concerns that advances in artificial intelligence technology will lead to mass unemployment, suggesting that “tech does not destroy jobs, it evolves them.” However, he claimed that Paychex has less exposure to AI risk than other businesses due to the nature of its customers.
“If this would happen — I don’t think it will, but if it does — 70% of our clients are blue and gray collared workers,” Gibson said. “Think plumbers, electricians, restaurants.”
