In yet another symptom of the CCP virus-driven economic rout, layoffs at small businesses with fewer than 49 employees jumped by 1,136 percent month-over-month, according to a payroll processing company report.
“The COVID-19 pandemic and the necessary government actions to reduce the spread of the virus have significantly impacted businesses across the country,” wrote Daniel Sternberg, head of data science at Gusto, in the Wednesday report.
The 1,136 percent change in the month-over-month layoff figure is a simple average of four small business segments Gusto tracked that employed fewer than 50 workers.
The report found that the hardest-hit were businesses with 25 to 49 employees, which saw a spike in layoffs of 1,631 percent between February and March. This was equivalent to a 6.94 percent month-over-month change in headcount.
“Small businesses have been forced to implement multiple strategies beyond layoffs to reduce headcount costs in order to make it through the first shockwave of sheltering in place and stay-at-home orders,” Sternberg wrote in the report, adding that data showed a 50 percent increase in the number of workers whose hours were cut significantly in March, year-over-year.
Businesses with more than 50 employees saw a month-over-month increase in layoffs of 721 percent, or 6.1 percent in headcount, the report said.
Businesses with fewer than five workers saw the smallest headcount decline at 1.02 percent month-over-month in March, and a corresponding 658 percent rise in layoffs compared to the previous month.
“One potential explanation for why the smallest businesses had relatively lower headcount reductions may be that many of these businesses have few to no employees who they can stand to lose without needing to fully shut down operations. As a result, if these businesses experience significant enough revenue shocks, they may close down entirely,” Sternberg wrote.
The figures were compiled using data from Gusto’s platform and are based on more than 100,000 small businesses across the country.
Forthcoming April figures could be even worse since, as Sternberg noted, the data in the report only includes the first half of March, before many states and cities imposed social distancing restrictions and stay-at-home orders.
Sternberg cautioned that despite “meaningful sample sizes” used in the calculations, the nature of the distribution of Gusto’s customers means that the conclusions “may not be fully representative of the industry and geographic breakdown of small businesses across the United States.”
The hardest-hit industry, both in terms of the percentage change in layoffs and headcount in March compared to February, was the food and beverage industry. Food and beverage saw a 9,040 percent increase in layoffs and a 13.07 percent drop in headcount.
This was followed by the salon and spa industry, which saw an increase in layoffs of 7,209 percent and a headcount drop of 8.68 percent, month-over-month.
‘Unemployment Rate Around 20 Percent’
Gusto’s small business employment trends report comes as economists at JPMorgan, America’s biggest bank, said the severity of the pandemic would likely result in a 40 percent drop in the country’s gross domestic product (GDP) and lead to a jobless rate of 20 percent.
“With these data in hand we think the April jobs report could indicate about 25 million jobs lost since the March survey week, and an unemployment rate around 20 percent,” the analysts wrote, CNBC reported. “Given the expected hit to hours worked this quarter we now look for -40.0 percent annualized real GDP growth in 2Q, down from -25.0 percent previously.”
The new analysis follows an earlier Goldman Sachs forecast that predicted a 34 percent plunge in the second quarter, and a Bank of America forecast that expects unemployment to soar to over 15 percent.
The predictions follow staggering weekly jobless claims figures, which showed that over the past three weeks, almost 17 million Americans have filed for unemployment.
Efforts to give the U.S. economy the best chance for a sharp bounceback have come from a historic COVID-19 relief bill, as well as recent measures by the Treasury and Federal Reserve to channel money to America’s small and medium-sized businesses to encourage them not to lay people off.
President Donald Trump, meanwhile, has sought to balance the needs of Americans to make a living with restrictions intended to save lives. The president said at a Thursday White House briefing that economic shutdowns across the country have exacted “a tremendous toll, mentally, on a lot of people.”
“I think we’re going to open up strong. I think we’re going to open up very successfully, and, I’d like to say, even more successfully than before,” Trump said, adding that, “We’re going to be opening up … very, very, very, very soon, I hope.”