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.
Françoise Gilles is AXA Group Chief Risk Officer and a member of the Group Management Committee, after having served in the AXA Asia Region since 2019 first as Chief Risk Officer, then as Chief Strategic Development Officer in charge of steering AXA's strategy across the Region, based in Hong-Kong. Françoise joined AXA in 2013, as Head of ALM and Capital Management for AXA Bank Europe, before being appointed as Board Member and Chief Risk Officer for AXA Bank Belgium. Before moving to Asia, Francoise served as AXA Belgium Head of P&C Retail. Francoise has served as non-executive board member and member of Audit and Risk Committees to several entities, incl. AXA Banque France, AXA Philippines, AXA Tianping, AXA IM Architas. She started her career in 1998 with ING and Fortis in Belgium, where she built experience in the areas of ALM, risk management and valuation. Francoise Gilles graduated as Civil Engineer from the Université Catholique de Louvain in 1998 and is an actuary.
Al Codalbu serves as Senior Vice President of Employer Business at Embold Health, where he leads the company's fastest-growing segment—employer-focused sales. With nearly 20 years of industry experience, Al leads growth by connecting employers with actionable, data-driven insights and solutions to help employees access high-quality care.
“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.”
