- Small business jobs index continues downward trend as COVID-19 surge weighs on companies
- Construction continues to perform well while leisure and hospitality suffers the worst effects
- Multiple forecasts anticipate higher job growth in the coming year, but don’t expect the economy to recover all the jobs lost in the pandemic
The end-of-year surge in COVID-19 cases helped drive down small business jobs and slow wage growth among their employees, according to a recent analysis. However, the report also determined that the construction industry continues to do well and that small business jobs had an incremental increase in the South.
The Paychex | IHS Markit Small Business Employment Watch benchmark report pegged the Jobs Index for December at 94.06. This marked a 0.24 percent drop from the previous year and a decline of 4.18 percent from December 2019.
The ongoing analysis notes that 95 percent of Americans are employed at small businesses, and that gauging their economic health offers an indicator of the health of the U.S. economy as a whole. The report focuses on data from approximately 350,000 Paychex clients to track employment and wage trends, concentrating on companies employing less than 50 people.
The Jobs Index has been trending downward for years, but dropped precipitously at the start of the COVID-19 pandemic. Its December reading was a record low, falling just below a Great Recession-era trough of 94.87 in July 2009. The South was the only region with an increase in its small business jobs index, which inched up 0.04 percent.
For the eighth consecutive month, construction was the leader in the industry jobs index with a reading of 97.59, although this was still down 1.34 percent from the previous year. Leisure and hospitality continued to suffer the worst fallout from the pandemic, with a reading of 87.08 – a year-over-year drop of 10.87 percent.
Wage growth at small businesses continued to slow, with the typical hourly pay of $28.28 making a 2.63 percent increase from the previous year but also the fifth consecutive month where annual growth has slowed. Weekly earnings growth slowed to 2.42 percent, the lowest increase since February 2019. Weekly hours worked also dropped for the fifth straight month, falling 0.27 percent.
Weekly wages in construction offered a bright spot, showing a robust 3.58 percent annual growth for typical weekly earnings of $1,083.49. While hourly earnings were up in leisure and hospitality, weekly earnings and hours worked were down significantly.
Multiple forecasts, including from IHS Markit, are anticipating major job gains this year as COVID-19 vaccines are distributed and customers return to their normal activities. However, it is also anticipated that job totals will still remain below pre-pandemic levels.
