Small Business Reopenings Contribute to Improvements in Hours Worked

Rhea-AI Summary

In June 2020, the Paychex | IHS Markit Small Business Employment Watch reported steady employment growth with a jobs index of 94.81, down just 0.06%. Notably, weekly earnings increased by 4.02% year-over-year, while annualized growth in weekly hours worked surged to 8.28%. Regionally, the Northeast saw a 4.40% decline in employment growth, with Arizona and Florida leading in job growth. The Leisure and Hospitality sector experienced significant wage gains, highlighting economic recovery as businesses reopened amid the pandemic.

Positive

• Weekly earnings growth increased by 4.02% year-over-year.
• Annualized one-month growth in weekly hours worked reached 8.28%.

Negative

• The jobs index in the Northeast dropped 4.40% during the past quarter.
• Leisure and Hospitality sector down 7.91% during the past quarter.

ROCHESTER, N.Y., June 30, 2020 /PRNewswire/ -- The latest Paychex | IHS Markit Small Business Employment Watch shows that employment growth held steady in June, with the jobs index moderating just 0.06 percent to 94.81. However, increases in weekly earnings signify an upward trend as more business reopened their doors, and employees resumed work. As such, annualized one-month growth in weekly hours worked reached 8.28 percent in June; weekly earnings growth rose to 4.02 percent; and hourly earnings growth increased to 3.46 percent ($0.94) year-over-year.

Note: Findings are reflective of data through Thursday, June 18, the cutoff date for the monthly Small Business Employment Watch. These insights precede recent COVID-19 case spikes in the South.

"The jobs index moved very little from May, but increases in wages and hours worked signal significant improvements in small business labor utilization in June," said James Diffley, chief regional economist at IHS Markit.

"The notable improvements in wage growth and moderation of decreasing job growth are meaningful signs that businesses around the country are starting to ease back into operations," said Martin Mucci, Paychex president and CEO. "As has been the case through the entire COVID-19 pandemic, the situation is rapidly evolving, and we will continue to keep a close eye on regions where a resurgence in cases may further impact the small business employment landscape."

The report also includes regional, state, metro, and industry level analysis, showing: 

• Employment growth in the Northeast has dropped 4.40 percent during the past quarter, with the most significant decline occurring in April. During this time, all other regions have posted declines of three percent or less.
• Arizona gained 0.89 percent from May to June, boosting its jobs index above 96 and trailing only Florida (97.60).
• Tampa, Phoenix, and Miami led all metros in the level of small business job growth in June.
• In the Northeast, Massachusetts, New Jersey, New York, and Pennsylvania scored significant weekly earnings gains from May to June, as did Michigan and Ohio in the Midwest.
• The hardest hit industry, Leisure and Hospitality, showed sizable wage gains from May to June as businesses reopened; weekly earnings growth increased to 3.76 percent from the previous year.

The complete results for June, including interactive charts detailing all data at a national, regional, state, metro, and industry level, are available at www.paychex.com/employment-watch. Highlights are available below. 

  National Jobs Index

• Though the national index moderated slightly in June, the one-month annualized rate of weekly hours worked increased by over eight percent as the country reopened and employees began returning to work.

National Wage Report

• Reaching four percent in June, weekly earnings continue to trend upward as both weekly hours worked and average hourly earnings improved.
• Annualized one-month growth in weekly hours worked topped eight percent in June as more businesses reopened and employees returned to work.

Regional Jobs Index

• Falling below 94 and remaining last among regions, the Northeast has dropped 4.40 percent during the past quarter, while all other regions posted declines of three percent or less.
• At 96.07, the South continues as the top region, well ahead of the next highest region, the Midwest, at 95.16.

Regional Wage Report 

• The hard-hit Northeast exhibited the largest gain in weekly earnings, 7.89 percent.
• At 2.81 percent, the South has the weakest hourly earnings growth rate among regions, partially attributed to its workforce stability throughout the pandemic.
• Down 0.62 percent year-over-year, the West is the only region with negative growth in weekly hours worked, though one-month and three-month annualized growth rates are signaling an upturn.

State Jobs Index

• Arizona gained 0.89 percent from May to June, boosting its index above 96 and trailing only Florida (97.60).
• One of the last states to shut down and the first to reopen, Florida saw its employment growth fall just 0.62 percent to 97.60.
• Indiana and Wisconsin suffered the largest setbacks in June, decreasing around one percent to index levels slightly above 95.
• The jobs index in New York remains the weakest (92.56) as the pace of small business employment growth has decreased nearly five percent during the past quarter.

Note: Analysis is provided for the 20 largest states based on U.S. population.

State Wage Report

• In the Northeast, Massachusetts, New Jersey, New York, and Pennsylvania scored significant weekly earnings gains from May to June, as did Michigan and Ohio in the Midwest.
• With fewer shutdowns and greater workforce stability, Texas ranks last among states in earnings and weekly hours growth.
• At 5.78 percent, New Jersey has experienced an uptick in hourly earnings growth in recent months.

Note: Analysis is provided for the 20 largest states based on U.S. population.

Metropolitan Jobs Index 

• The Sun Belt cities of Tampa, Phoenix, and Miami led all metros in the level of small business job growth in June.
• Seattle and San Francisco trail all metros, with index levels at approximately 93 and year-over-year declines of more than five percent.
• Half of the metros analyzed have index levels below 95.

Note: Analysis is provided for the 20 largest metro areas based on U.S. population.

Metropolitan Wage Report

• Weekly earnings growth in Boston surged to 7.77 percent, best among metros, as one-month annualized growth from May to June increased nearly 25 percent with businesses reopening and increasing hours.
• Dallas and Houston are ranked last in all three wage components, with negative weekly earnings and hours worked growth.

 Note: Analysis is provided for the 20 largest metro areas based on U.S. population.

Industry Jobs Index

• At 89.63, Leisure and Hospitality is down 7.91 percent during the past quarter, reporting more than twice the losses of any other sector since the beginning of the coronavirus pandemic.
• Trade, Transportation, and Utilities rebounded slightly from its April and May lows, up 0.49 percent to above 94.
  

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  

• The impact of construction workers returning to job sites was evident in June with earnings gains above four percent in that industry.
• Education and Health Services has yet to recover, reporting -1.65 percent weekly earnings growth, nearly five percent below the next lowest industry, 3.10 percent (Manufacturing).
• The hardest-hit industry, Leisure and Hospitality showed sizable wage gains from May to June as businesses reopened; weekly earnings growth increased to 3.76 percent from the previous year.

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/employment-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 human resources, payroll, benefits, 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 serves approximately 670,000 payroll clients as of May 31, 2019 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 www.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 © 2020 IHS Markit Ltd. All rights reserved.

Media Contacts

Lisa Fleming
Paychex, Inc.
+1 585-387-6402
lfleming@paychex.com 
@PaychexNews 

Kate Smith
IHS Markit
+1 781-301-9311
katherine.smith@ihsmarkit.com 

Tess Flynn
Mower
+1 716-880-1488
tflynn@mower.com 

 

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SOURCE Paychex, Inc.

FAQ

What are the latest employment trends reported by Paychex for June 2020?

The Paychex | IHS Markit report indicates steady employment growth with a jobs index of 94.81 and a 4.02% increase in weekly earnings.

How did the COVID-19 pandemic impact small business employment in June 2020?

Employment growth in the Northeast declined by 4.40%, while other regions showed less than 3% decline, demonstrating varying impacts across the U.S.

What sector showed wage gains in June 2020 according to the Paychex report?

The Leisure and Hospitality sector exhibited significant wage gains, increasing weekly earnings by 3.76% from the previous year.

What was the jobs index value for Paychex in June 2020?

The jobs index for June 2020 was reported at 94.81, a slight decrease of 0.06% from May.

Which states showed the most job growth in June 2020?

Arizona and Florida led the states in job growth during June 2020, with Arizona gaining 0.89%.