COVID-19 Cases Spur Decline in Small Business Jobs Accoding to Report by Paychex

New report by Paychex and IHS Markit indicates the South leads all regions in employment growth and shows continued strength for jobs and wage growth in the construction industry

The latest Paychex | IHS Markit Small Business Employment Watch benchmark report reveals the effect of increasing COVID-19 cases on small businesses in the U.S. The Jobs Index shows a slowing of 0.24 percent in December to 94.06, a decrease of 4.18 percent from the year prior. A decline in weekly hours worked and hourly earnings growth decelerating to 2.63 percent brought national weekly earnings growth to 2.42 percent.

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“The winter season brought a surge in COVID-19 cases and with it a retreat in jobs growth,” said James Diffley, chief regional economist at IHS Markit.

“The new pandemic stimulus package has come at the right time for business owners. COVID-19 cases continue to grow and many state and local restrictions remain in place, limiting business activity in some communities,” said Martin Mucci, Paychex president and CEO. “The second round of Paycheck Protection Program loans, simplified forgiveness for new and existing PPP loans, and an extension and expansion of the Employee Retention Tax Credit are all significant measures to help businesses weather the months ahead.”

In further detail, the December report showed:

• The South was the only region to improve job growth in December (up 0.04 percent).
• Florida regained its position as the top-ranked state, up 0.28 percent with an index of 97.00.
• Tennessee improved 0.76 percent in December and is up 1.01 percent during the past quarter, best among states.
• Houston and Dallas have the best three-month employment growth rates among metros.
• Construction leads the industry jobs index for the eighth consecutive month.
• Financial activities has the best weekly hours worked growth among sectors.

The complete results for December, including interactive charts detailing all data at a national, regional, state, metro, and industry level, are available at www.paychex.com/watch. Highlights are available below. 

Note: Data presented for the month of December was collected between November 13, 2020 and December 17, 2020.

National Jobs Index

• At 94.06, the Small Business Jobs Index slowed 0.24 percent in December and 4.18 percent from last year.
• The year ended with the index reaching a new low of 94.06.

National Wage Report

• Hourly earnings growth slowed for the fifth consecutive month, from a peak of 3.29 percent in June to 2.63 percent in December.
• Weekly earnings growth slowed to 2.42 percent, its lowest level since February 2019.
• Weekly hours worked growth slowed for the fifth consecutive month to negative 0.27 percent in December.

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Regional Jobs Index

• The South was the only region to post a gain in December (0.04 percent), the other three regions declined 0.25 percent or more.
• Ranked second among regions since April, the Midwest declined 0.49 percent in December, its largest decrease since April.
• At 93.05, the West remains the lowest-ranked region for the fourth consecutive month.

Regional Wage Report 

• Since the highs seen in June and July, earnings and hours worked growth have experienced a downturn in the Northeast.
• Hourly earnings growth has slowed for 13 consecutive months in the West, from 3.41 percent in November 2019 to 2.46 percent this December.
• Both hourly and weekly earnings growth are below two percent in the South, lowest among regions.

State Jobs Index

• Florida regained its position as the top-ranked state, up 0.28 percent with an index reading of 97.00.
• Tennessee improved 0.76 percent in December and is up 1.01 percent during the past quarter, best among states.
• North Carolina has not posted a decrease since August, steadily improving to ninth among states at 94.40.
• At 91.28, Washington is the lowest performing state index for the sixth straight month, though it has been flat during the past quarter.

Note: Analysis is provided for the 20 largest states based on U.S. population.

State Wage Report

• The Northeast states of New Jersey, Pennsylvania, and Massachusetts have the top three hourly and weekly earnings growth rates among states.
• Weekly earnings growth is negative in Texas as hourly earnings growth is less than one percent and weekly hours worked growth is down nearly one percent from last year.
• Four states have weekly earnings growth below one percent (Texas, Illinois, Tennessee, and Georgia).

Note: Analysis is provided for the 20 largest states based on U.S. population.

Metropolitan Jobs Index 

• Of the 20 metropolitan cities analyzed, 16 decreased in December, with only Atlanta, Miami, San Francisco, and San Diego posting gains.
• Houston and Dallas have the best three-month growth rates among metros, 0.69 percent and 0.62 percent, respectively.
• Holding steady since April, Detroit dropped the most among metros in December (1.06 percent).

Note: Analysis is provided for the 20 largest metro areas based on U.S. population.

Metropolitan Wage Report

• Riverside, CA has led all metros in earnings for second half of 2020, with growth consistently trending above five percent for hourly earnings and above six percent for weekly earnings.
• For the first time since reporting began in 2011, Detroit ranks in the top three for earnings and hours worked growth among metros.

Note: Analysis is provided for the 20 largest metro areas based on U.S. population.

Industry Jobs Index

• Construction leads the industry index for the eighth consecutive month, despite its growth rate remaining flat in December.
• Financial activities is up 0.10 percent during the past quarter and down just 0.59 percent from last year, both best among industries.
• Leisure and hospitality had another setback, falling 1.20 percent to 87.08, now five and a half points below all other sectors.

Note: Analysis is provided for seven major industry sectors. Definitions of each industry sector can be found here. The Other Services (excluding Public Administration) industry category includes religious, civic, and social organizations, as well as personal services, including automotive and household repair, salons, drycleaners, and other businesses.

Industry Wage Report 

• With 2020 coming to a close, weekly earnings growth in the construction industry is a bright spot, up 3.58 percent since December 2019 – all other sectors have weekly earnings growth below three percent.
• One-month annualized growth for weekly earnings and hours worked are down double digits in leisure and hospitality as the industry continues to be the pandemic’s most negatively affected sector.
• Financial activities has the best weekly hours worked growth among sectors, 0.32 percent.