As of early May, according to a Paychex jobs report, small business employment is down in light of the COVID-19 pandemic—in some cases, we are seeing historic declines. Nationwide, numerous employers have had to lay off workers and even fire some employees all together as they simply could not sustain payroll and their businesses. Consistent with what we saw in 2009 during the financial crisis, the job index is down to 94.63. And while the amount of hourly earnings is up slightly, a month analysis of the number of weekly hours worked on average during the coronavirus shows that that has dropped significantly throughout April—by nearly nine percent. Experts indicate that employment levels in some instances are registering just below what was seen during the Great Recession.
Without question COVID-19 has negatively impacted small businesses across the nation, not to mention on a worldwide scale. The jobs index numbers show that indeed small businesses are shutting down, downsizing staff, and thus have made efforts to reduce payroll as they simply can't afford to sustain a full roster of employees during this crisis. The measures taken are helping some smaller business owners stay afloat and yet the battle is still a steeply uphill one. The other option for many at this time has been the PPP. For some companies, this government-backed loan program is all that is allowing them to make it through until the country starts to reopen.
Some other key statistics the April report shows:
- Florida, one of the biggest states to close, has the highest job index rating.
- New York, which is considered the epicenter of the outbreak, has the lowest-ranked index at 92.81.
- New York City, in particular, saw the greatest decline in several hours worked per week on average—negative 16.44 percent.
- During the Great Recession, the hospitality industry jobs index was 94.25. Last month it fell to 90.29.
- First among job sectors is the financial industry as far as small business job growth is concerned.
Additional Highlights Found in the Paychex Report
National Jobs Index
- The COVID-19 pandemic has caused a historic low; the national jobs index dipped below that seen during the Great Recession.
- The national jobs index was down by 3.65 percent in April—this is over four percent less than a year ago.
National Wage Report
- Hourly earnings did experience a slight increase to 2.78 percent. Weekly earnings, however, have fallen.
- The number of weekly hours worked on average fell during April; one month annualized growth is down 8.92 percent.
Regional Jobs Index
- All regions experienced a decline of just over 3% in April; index levels are all below 96.
- The Northeast region of the country saw the steepest declines; they are at an all-time low of 94.09.
- The only sector of the nation of stay above the Great Recession level was the Midwest.
State Wage Report
- For the 20 states analyzed in this report, the weekly earnings slowed.
- California, however, stayed at the top in terms of hourly earnings growth for April. Illinois and Georgie were also among the top three.
Metropolitan Jobs Index
- For each metro area included, the index level was below 97 for April.
- At 96.60, Denver represented the top-performing metro area during April.
Metropolitan Wage Report
- Among all metro areas analyzed, New York City experienced the greatest decline as far as weekly hours worked.
- Seven of the twenty metro regions saw negative annual weekly earnings growth.
What Does the Future Hold Post-Pandemic?
All in all, what do these job index numbers and statistics mean for the US economy moving forward, especially those metro areas hardest hit by the pandemic…At this juncture, many experts claim that it is difficult to say. With more than twenty million jobs lost just during April, the country is breaking records set during both the Great Recession and the Great Depression.
Some recent forecasts by leading economists across the country:
- Roughly 60% of those laid off will be rehired; while forty percent of those layoffs may become permanent.
- As more and more businesses file for bankruptcy the likelihood of permanent layoffs increases.
- With some state mandates still restricting businesses from opening, there is a chance that as many as 40% of the nation's small businesses may remain permanently shuttered.
- Some experts are suggesting that around 13 million jobs may have been lost for good.
- Confidence levels among those without a college degree and who are making less than 50k per year, are dwindling.
- More jobs are expected to be cut next year in the aftermath of COVID-19.
While certainly many of the forecasts regarding jobs and unemployment do seem grim, we are seeing some positives as more and more states begin the reopening process. For instance, Morgan Stanley has predicted that while yes, there will be and has been a sharp economic downturn, there will be just as sharp a bounce back by almost thirty percent in the second quarter. And many other leading economists are also anticipating a shorter bounce back period than we experienced after the Great Recession.
The virus itself is largely going to dictate how fast the US bounces back from a financial aspect. With states reopening daily it remains to be seen what happens exactly in terms of how COVID-19 acts. That said, the country's small businesses are forging ahead. And First Union Lending would love to help. We offer fast and flexible loan solutions custom-tailored to smaller companies. If you need cash to stay afloat and weather the storm, we are here. Not to mention, with billions in PPP dollars still available we can get those eligible companies the SBA backed funding they so desperately need sooner rather than later. Call today and let's put together a plan to keep your small business alive and well during this difficult time!