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Small Business Employees Return to Work – With Reduced Hours and Wages

  • Data shows a 2.4 percent increase in small business headcount in June compared to the previous month
  • Cuts in hours and pay rates have been more than furloughs likely to account for reduced wages
  • Employees have also shown an increased willingness to voluntarily leave a job for new opportunities

Staff levels at small businesses across the United States have been increasing recently, but new workers are often being brought on with reduced pay and hours due to ongoing economic uncertainty from the COVID-19 pandemic.

An analysis of more than 100,000 small businesses by the payroll services company Gusto determined that the businesses’ headcount was up 2.4 percent in June compared to the previous month. Eighty-two percent of this staffing increase was a result of new hires, while 18 percent were rehires.

Cuts in hours accounted for 33 percent of reduced wages in June, while pay rate cuts accounted for 27 percent and furloughs for 25 percent. Salaried workers were more likely to experience wage cuts, with the number of employees experiencing a pay cut of at least 10 percent up by 80 percent compared to pre-COVID levels. Hourly workers were less likely to have their hours or pay cut, but more susceptible to furloughs or termination.

The data also suggests that employees have been able to return to work in recent months, but not at full capacity. Layoffs were up compared to pre-COVID levels and the previous year, and workers showed more increased willingness to voluntarily leave their job for other opportunities. A total of 3.4 percent did so in June, a monthly increase of 32 percent.

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