- Federal Reserve Bank of New York researchers look at rehiring trends in the services sector
- Thirty-five percent of businesses in this sector remain closed, with most having been shuttered since the start of the pandemic
- Researchers anticipate that just 3 percent of currently closed service businesses will be able to reopen
Summary by Dirk Langeveld
Only a fraction of businesses in the services sector that remain closed due to the COVID-19 pandemic are likely to reopen, according to a recent report by the Federal Reserve Bank of New York. Similarly, researchers also anticipate that few service workers who have been laid off from currently shuttered businesses will be rehired by their employer.
Researchers used data from Homebase, a scheduling and time tracking tool primarily used by small businesses in the retail, leisure, and hospitality industries. Their findings include:
- Thirty-five percent of businesses in these sectors that were active before the pandemic remain closed, and new business openings have not yet offset them
- Businesses that reopened after an initial shutdown rehired about 70 to 80 percent of workers, with rehiring proceeding at a slower pace afterward
- Most businesses that remain closed have been shuttered since the start of the pandemic
- Each additional week of closure reduces the probability of reopening by about 2 percentage points due to reasons such as ongoing fixed costs, a diminishing customer base, and “declining entrepreneurial qualities”
- Researchers anticipate that only 3 percent of currently closed service businesses will be able to reopen, and that only about 4 percent of the workers at these businesses will be rehired
