Small Business Employment Declines, Reflecting the Ongoing Impact of the Coronavirus Pandemic
The latest Paychex | IHS Markit Small Business Employment Watch shows a decrease in small business employment as the COVID-19 pandemic caused instability for employers nationwide. The jobs index declined 3.65 percent last month to 94.63, a level consistent with rates seen in 2009 during the financial crisis. Hourly earnings growth rose slightly to 2.78 percent ($0.75) year-over-year. However, one-month annualized weekly hours worked growth dropped sharply, by 8.92 percent in April, resulting in a decline in weekly earnings growth to 1.28 percent from a year ago.
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“April’s decline marks a low for the jobs index, with employment registering slightly below levels seen in July 2009, during the Great Recession,” said James Diffley, chief regional economist at IHS Markit.
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“This month’s results reflect some of the negative impact COVID-19 has had on small business employment across the U.S. Our jobs index reflects that many small businesses have suspended operations and reduced payroll costs through partial or complete shutdowns, but are trying to remain in business while navigating a number of federal support opportunities,” said Martin Mucci, Paychex president and CEO. “Receiving loan approval and funds from the Paycheck Protection Program is a critical next step for many small businesses as they look forward to the gradual, safe reopening of the economy and their employees returning to work.”
Broken down further, the April report shows:
- One of the last large states to shut down, Florida, had the highest jobs index reading among states.
- New York, the state considered the epicenter of COVID-19 in the U.S., saw its jobs index fall to 92.81 and now has the lowest-ranked state index.
- Among metros, New York City had the largest decline in weekly hours worked (falling to -16.44 percent one-month annualized growth in April).
- The jobs index for Leisure and Hospitality fell to a record low (90.29), surpassing its previous low of 94.25 seen during the financial crisis.
- One-month annualized weekly hours worked growth in Leisure and Hospitality is down 53.43 percent.
- Among industry sectors, Financial Activities saw the least disruption in the rate of small business job growth and now ranks first among all sectors.
The complete results for April, including interactive charts detailing all data at a national, regional, state, metro, and industry level, are available at www.paychex.com/employment-watch. Highlights are available below.
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