Increase in COVID-19 Cases Spur Decline in Small Business Jobs and Wage Growth
The Paychex | IHS Markit Small Business Employment Watch report shows a 0.24% decline in the Jobs Index for December, landing at 94.06, a 4.18% decrease year-over-year. Weekly hours worked fell to -0.27%, while hourly earnings growth decelerated to 2.63%. The South was the only region to see job growth, with Florida leading among states at 97.00. The report highlights the ongoing impact of COVID-19, as jobs and wage growth continue to decline amid increasing cases and state restrictions.
- The South region recorded a slight job growth of 0.04% in December.
- Florida regained its position as the top-ranked state for job growth at 0.28%.
- The national Jobs Index decreased by 0.24% and fell 4.18% year-over-year, reaching a new low.
- Hourly earnings growth slowed for five consecutive months to 2.63%, and weekly earnings growth slowed to 2.42%, the lowest since February 2019.
- Weekly hours worked growth declined for five consecutive months to negative 0.27%.
ROCHESTER, N.Y., Jan. 8, 2021 /PRNewswire/ -- The latest Paychex | IHS Markit Small Business Employment Watch benchmark report reveals the effect of increasing COVID-19 cases on small businesses in the U.S. The Jobs Index shows a slowing of 0.24 percent in December to 94.06, a decrease of 4.18 percent from the year prior. A decline in weekly hours worked and hourly earnings growth decelerating to 2.63 percent brought national weekly earnings growth to 2.42 percent.
"The winter season brought a surge in COVID-19 cases and with it a retreat in jobs growth," said James Diffley, chief regional economist at IHS Markit.
"The new pandemic stimulus package has come at the right time for business owners. COVID-19 cases continue to grow and many state and local restrictions remain in place, limiting business activity in some communities," said Martin Mucci, Paychex president and CEO. "The second round of Paycheck Protection Program loans, simplified forgiveness for new and existing PPP loans, and an extension and expansion of the Employee Retention Tax Credit are all significant measures to help businesses weather the months ahead."
In further detail, the December report showed:
- The South was the only region to improve job growth in December (up 0.04 percent).
- Florida regained its position as the top-ranked state, up 0.28 percent with an index of 97.00.
- Tennessee improved 0.76 percent in December and is up 1.01 percent during the past quarter, best among states.
- Houston and Dallas have the best three-month employment growth rates among metros.
- Construction leads the industry jobs index for the eighth consecutive month.
- Financial activities has the best weekly hours worked growth among sectors.
The complete results for December, including interactive charts detailing all data at a national, regional, state, metro, and industry level, are available at www.paychex.com/watch. Highlights are available below.
Note: Data presented for the month of December was collected between November 13, 2020 and December 17, 2020.
National Jobs Index
- At 94.06, the Small Business Jobs Index slowed 0.24 percent in December and 4.18 percent from last year.
- The year ended with the index reaching a new low of 94.06.
National Wage Report
- Hourly earnings growth slowed for the fifth consecutive month, from a peak of 3.29 percent in June to 2.63 percent in December.
- Weekly earnings growth slowed to 2.42 percent, its lowest level since February 2019.
- Weekly hours worked growth slowed for the fifth consecutive month to negative 0.27 percent in December.
Regional Jobs Index
- The South was the only region to post a gain in December (0.04 percent), the other three regions declined 0.25 percent or more.
- Ranked second among regions since April, the Midwest declined 0.49 percent in December, its largest decrease since April.
- At 93.05, the West remains the lowest-ranked region for the fourth consecutive month.
Regional Wage Report
- Since the highs seen in June and July, earnings and hours worked growth have experienced a downturn in the Northeast.
- Hourly earnings growth has slowed for 13 consecutive months in the West, from 3.41 percent in November 2019 to 2.46 percent this December.
- Both hourly and weekly earnings growth are below two percent in the South, lowest among regions.
State Jobs Index
- Florida regained its position as the top-ranked state, up 0.28 percent with an index reading of 97.00.
- Tennessee improved 0.76 percent in December and is up 1.01 percent during the past quarter, best among states.
- North Carolina has not posted a decrease since August, steadily improving to ninth among states at 94.40.
- At 91.28, Washington is the lowest performing state index for the sixth straight month, though it has been flat during the past quarter.
Note: Analysis is provided for the 20 largest states based on U.S. population.
State Wage Report
- The Northeast states of New Jersey, Pennsylvania, and Massachusetts have the top three hourly and weekly earnings growth rates among states.
- Weekly earnings growth is negative in Texas as hourly earnings growth is less than one percent and weekly hours worked growth is down nearly one percent from last year.
- Four states have weekly earnings growth below one percent (Texas, Illinois, Tennessee, and Georgia).
Note: Analysis is provided for the 20 largest states based on U.S. population.
Metropolitan Jobs Index
- Of the 20 metropolitan cities analyzed, 16 decreased in December, with only Atlanta, Miami, San Francisco, and San Diego posting gains.
- Houston and Dallas have the best three-month growth rates among metros, 0.69 percent and 0.62 percent, respectively.
- Holding steady since April, Detroit dropped the most among metros in December (1.06 percent).
Note: Analysis is provided for the 20 largest metro areas based on U.S. population.
Metropolitan Wage Report
- Riverside, CA has led all metros in earnings for second half of 2020, with growth consistently trending above five percent for hourly earnings and above six percent for weekly earnings.
- For the first time since reporting began in 2011, Detroit ranks in the top three for earnings and hours worked growth among metros.
Note: Analysis is provided for the 20 largest metro areas based on U.S. population.
Industry Jobs Index
- Construction leads the industry index for the eighth consecutive month, despite its growth rate remaining flat in December.
- Financial activities is up 0.10 percent during the past quarter and down just 0.59 percent from last year, both best among industries.
- Leisure and hospitality had another setback, falling 1.20 percent to 87.08, now five and a half points below all other sectors.
Note: Analysis is provided for seven major industry sectors. Definitions of each industry sector can be found here. The Other Services (excluding Public Administration) industry category includes religious, civic, and social organizations, as well as personal services, including automotive and household repair, salons, drycleaners, and other businesses.
Industry Wage Report
- With 2020 coming to a close, weekly earnings growth in the construction industry is a bright spot, up 3.58 percent since December 2019 – all other sectors have weekly earnings growth below three percent.
- One-month annualized growth for weekly earnings and hours worked are down double digits in leisure and hospitality as the industry continues to be the pandemic's most negatively affected sector.
- Financial activities has the best weekly hours worked growth among sectors, 0.32 percent.
Note: Analysis is provided for seven major industry sectors. Definitions of each industry sector can be found here. The Other Services (excluding Public Administration) industry category includes religious, civic, and social organizations, as well as personal services, including automotive and household repair, salons, drycleaners, and other businesses.
For more information about the Paychex | IHS Markit Small Business Employment Watch, visit www.paychex.com/watch and sign up to receive monthly Employment Watch alerts.
*Information regarding the professions included in the industry data can be found at the Bureau of Labor Statistics website.
About the Paychex | IHS Markit Small Business Employment Watch
The Paychex | IHS Markit Small Business Employment Watch is released each month by Paychex, Inc., a leading provider of payroll, human resource, insurance, and benefits outsourcing solutions for small-to medium-sized businesses, and IHS Markit, a world leader in critical information, analytics, and expertise. Focused exclusively on small business, the monthly report offers analysis of national employment and wage trends, as well as examines regional, state, metro, and industry sector activity. Drawing from the payroll data of approximately 350,000 Paychex clients, this powerful tool delivers real-time insights into the small business trends driving the U.S. economy.
About Paychex
Paychex, Inc. (NASDAQ:PAYX) is a leading provider of integrated human capital management solutions for payroll, benefits, human resources, and insurance services. By combining its innovative software-as-a-service technology and mobility platform with dedicated, personal service, Paychex empowers small- and medium-sized business owners to focus on the growth and management of their business. Backed by more than 45 years of industry expertise, Paychex served more than 680,000 payroll clients as of May 31, 2020 across more than 100 locations in the U.S. and Europe, and pays one out of every 12 American private sector employees. Learn more about Paychex by visiting paychex.com and stay connected on Twitter and LinkedIn.
About IHS Markit (www.ihsmarkit.com)
IHS Markit (NYSE: INFO) is a world leader in critical information, analytics and solutions for the major industries and markets that drive economies worldwide. The company delivers next-generation information, analytics and solutions to customers in business, finance and government, improving their operational efficiency and providing deep insights that lead to well-informed, confident decisions. IHS Markit has more than 50,000 business and government customers, including 80 percent of the Fortune Global 500 and the world's leading financial institutions. Headquartered in London, IHS Markit is committed to sustainable, profitable growth.
IHS Markit is a registered trademark of IHS Markit Ltd. and/or its affiliates. All other company and product names may be trademarks of their respective owners © 2021 IHS Markit Ltd. All rights reserved.
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