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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…

  • May 28, 2020

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.

“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.

“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.

National Jobs Index

  • As a result of the COVID-19 pandemic, the national jobs index declined to a historic low (94.63), slightly below levels seen during the financial crisis.
  • The national jobs index fell 3.65 percent in April and 4.19 percent from a year ago.

National Wage Report

  • Hourly earnings growth improved slightly to 2.78 percent, though weekly earnings growth fell considerably in April (declining to 1.28 percent).
  • One-month annualized weekly earnings growth turned negative in April, the first negative result since Small Business Employment Watch wage tracking began in June 2010.
  • Weekly hours worked growth fell significantly in April, with one-month annualized growth down 8.92 percent.

Regional Jobs Index

  • All regions declined more than three percent in April and have index levels below 96.
  • Among regions, the Northeast had the steepest decline, falling 4.18 percent and declining to a historic low of 94.09.
  • At 95.01, the Midwest is the only region above its recession low (93.56).
  • Regional Wage Report
  • Weekly hours worked growth slowed double digits in April (one-month annualized growth) in all regions except the Midwest.
  • Weekly earnings growth fell to 0.18 percent in the Northeast in April as one-month annualized growth fell sharply to -11.96 percent.

State Jobs Index

  • 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.
  • While the index for most states fell more than three percent in April, Illinois only saw a -1.93 percent decrease.
  • Note: Analysis is provided for the 20 largest states based on U.S. population.
  • State Wage Report
  • The impact of COVID-19 pulled year-over-year weekly hours worked growth negative for all 20 states analyzed.
  • California remained the top state for hourly earnings growth in April, while Illinois and Georgia each improved to round out the top three.

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

Metropolitan Jobs Index 

  • The index level for each U.S. metro analyzed fell below 97 in April.
  • At 96.60, Denver fell less than three percent in April and became the top performing metro.

Metropolitan Wage Report

  • Among metros, New York City had the largest decline in weekly hours worked (falling to -16.44 percent one-month annualized growth in April).
  • Seven metros reported negative annual weekly earnings growth in April.

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

Industry Jobs Index

  • 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.
  • Among industry sectors, Financial Activities saw the least disruption in the rate of small business job growth and now ranks first among all sectors.
  • Despite falling to 96.56, Construction remains well ahead of its recession low of 91.23.