Growth in small business jobs and wages declined last month as a result of the novel coronavirus pandemic, according to payroll giant Paychex.
The latest Paychex | IHS Markit Small Business Employment Watch report, released Friday, indicates the impact of the increasing number of COVID-19 cases on small businesses in the U.S. The Jobs Index exhibited a slowing of 0.24 percent in December to 94.06, a decline of 4.18 percent from the previous year. A decrease in weekly hours worked, and the deceleration of hourly earnings growth to 2.63 percent, brought national weekly earnings growth to 2.42 percent.
Peter Pezaris is New Relic's Chief Design and Strategy Officer, leading user experience vision and design and design system and quality. Prior to New Relic, Pezaris was the Founder & CEO of CodeStream, a service that helps development teams discuss, review, and understand code. Before CodeStream, Pezaris was Founder & CEO of Glip, a team collaboration platform acquired by RingCentral in 2015, and Multiply.com, a social commerce platform acquired by Naspers in 2010. He also founded Commissioner.com, one of the first online fantasy sports platforms, which was acquired by CBS in 1999. A seasoned entrepreneur and tech executive, Pezaris is a recognized expert in the collaboration and social networking space, pioneering several of today's most commonly used features in real-time messaging. Pezaris holds BS degrees in Computer Science and Applied Mathematics from Carnegie Mellon University.
Camay Pascucci is vice president, wealth management, at OneDigital Retirement + Wealth.
She has spent her career empowering clients to reach their personal financial planning goals, with previous roles at BNY/Mellon, Fidelity Investments, Scudder Investments and Charles Schwab & Co.
Julia Voloshchenko is the PR Manager at Workcore.
“This month we saw a decline in the overall index again, which is consistent with what we’ve been seeing for quite some time,” Frank Fiorille, vice president of risk management, compliance and data analytics at Paychex.
Like the U.S. Bureau of Labor Statistics jobs report that was also released Friday, Paychex found similar declines in the leisure and hospitality sector due to shutdowns from the COVID-19 pandemic (see story). “If you eliminate that sector, the [Paychex] report was actually fairly positive,” said Fiorille. “I think that’s pretty consistent with the nonfarm payroll report. The Friday jobs report just came out and for the first time since April, it was negative.”
The South was the only region of the country to improve job growth in December, increasing 0.04 percent). Fiorille attributed that to having looser restrictions on businesses being open than in other parts of the country. Florida regained its position as the top-ranked state for small business job growth, up 0.28 percent with an index of 97.00. Tennessee improved 0.76 percent in December and is up 1.01 percent in the fourth quarter, ranking it best among states. Houston and Dallas had the best three-month employment growth rates among metropolitan areas. Construction led the way on the industry jobs index for the eighth consecutive month compared to other industries. Financial activities had the best weekly hours worked growth among the various sectors.
Hourly earnings growth slowed for the fifth month in a row, from a peak of 3.29 percent in June to 2.63 percent in December. Weekly earnings growth slowed to 2.42 percent, the lowest level since February 2019. Weekly hours worked growth slowed for the fifth straight month to negative 0.27 percent in December.
“On the wage front we’re seeing a little bit of an uptick there,” said Fiorille. “We think the reason there is that on Jan. 1, a lot of states and areas went to a minimum wage increase. We saw a lot of clients get ahead of that last month, so you’re seeing an uptick in that first quintile, that lower-wage sector.”
The stimulus package that was signed into law at the end of December could help some struggling small businesses, especially with the fresh round of $284 billion in funding for the Paycheck Protection Program. The legislation also includes a provision allowing businesses to deduct the expenses associated with seeking loan forgiveness, which could make it easier for them to engage accountants to help with the loan application and forgiveness process.
On Friday, the Small Business Administration and the Treasury Department announced that the PPP would re-open Monday, Jan. 11 for new borrowers and some existing PPP borrowers. Initially only community financial institutions will be able to make “First Draw PPP Loans” on Monday and “Second Draw PPP Loans” on Wednesday. The PPP will open to all participating lenders shortly after that.
“That’s really good news given that this thing just got passed, and a lot of people thought it was going to take weeks given how the first thing came out,” said Fiorille. “It’s nice that they got the guidance out pretty quick.”
In combination with the extension of Employee Retention Tax Credits, the latest round of PPP funding could help many small businesses survive this year. “There’s a lot of stuff that’s going to help prop up the small businesses,” said Fiorille. “It’s very targeted to the mom-and-pop Main Street businesses.”
