Main Street health: How did businesses fare in August?

In our latest monthly installment of Main Street perspectives, we once again revisited the 60,000 businesses and one million active hourly employees that use Homebase to garner insight into the state of economic recovery in the US. 

Here’s what we found. 

How did Main Street fare in August? 

The stagnation of July continued into August, as Main Street faces sustained suppressed consumer demand due to continued public health concerns and capacity / opening restrictions.

Since last month’s report, Congress has yet to agree on a stimulus plan, leaving Main Street on its own to find ways to survive in an increasingly unpredictable time period.

Furthermore, there is a concern that Main Street may face seasonal headwinds as the traditional end-of-summer slowdown begins to kick in, further exacerbating the already stagnant recovery observed this past month.

Small business economic recovery continues to be stagnant

More than 20% of small businesses remain closed nationwide, resulting in little to no improvement in economic indicators compared to July. 

main street health

The tail end of August shows slight slowing, potentially indicating that typical end-of-summer / back-to-school slowdowns may be beginning to set in. 

While some areas of the country are still demonstrating improvement in employment and businesses open, declines in other regions have led to a net decline in overall economic activity.

Little to no improvement since end of June

Similar to what we saw in July, fewer employees were working at the end of the month, relative to the beginning of the month.

percent of employees working

This month, we also affirmed what we observed in July in relation to discrepancies between “early open” vs. “late open” states: “late open” states (NY, NJ) have fully caught up to “early open” states (TX, FL) as “early open” states experienced contraction in July and August. 

businesses open

It’s worth noting that despite geographic differences, the state-level differences in economic impact are relatively minor compared to earlier on in the pandemic, especially considering how far below pre-covid levels every state (and the country as a whole) remains.

Implications for unemployment

In our data, the August reference period saw a 2 percentage point improvement when compared against the July reference period. Therefore, the Bureau of Labor Statistics may report a slight improvement in economic activity, even though the general trend has been largely flat.

Regardless, it is clear that the improvement from July to August is less than improvement observed from June to July. 

main street health jobs report survey

Below are the percentage of employees working (during the sample period) compared to our January baseline:

  • August: -21%
  • July: -23%
  • June: -27%
  • May: -42%
  • April: -60%

Seasonal headwinds may be kicking in

In a typical year, economic activity slows down at the end of summer as students head back to school and cooler weather curbs outdoor spending. This may help to explain the slight dip at the end of August.

employees working relative to january

If this seasonal pattern is repeated this year, we could see exacerbated conditions stemming from further loss in employment heading into the fall without further government assistance to Main Street and its workers.

How has Homebase data been validated?

We’ve partnered with a number of academics and researchers to validate and improve the Homebase data. Here are a few examples: 

  • The St. Louis Federal Reserve suggested that Homebase data could be predictive of the jobs reports
  • Researchers at Drexel used Homebase data to estimate the “true” employment level
  • A team at UChicago and Berkeley used Homebase data to show disparate impacts across different groups

Questions or comments about our findings?

Contact Homebase VP of Data & Analytics Ray Sandza and Manager, Data Products Kevin Liang to learn more. 

Homebase makes work easier for 100,000+ small (but mighty) businesses with everything they need to manage an hourly team: employee scheduling, time clocks, team communication, hiring, onboarding, and compliance. We are not Human Capital Management. We are not HR Software. We’re tools built for the busiest businesses, so owners and employees can spend less time on paperwork and more time on what matters.

Main Street health: How did businesses fare in July?

As we did in June, we turned to Homebase data to get a picture of what businesses looked like for Main Street establishments across the U.S. in July. With over 60,000 businesses and one million active hourly employees, we were able to gain insight into economic recovery, unemployment, and more. 

Here’s what we found. 

How did Main Street fare in July? 

July was a month of stagnation for Main Street as cases surged in some areas, reigniting the discussion on shutdowns. It was also the first month since March without growth in SMB activity.  

Further, Congress’s failure to reach a deal to extend unemployment insurance benefits puts hourly workers at risk as the economy loses momentum from the recovery in May and June. 

Small business economic recovery stagnated

Roughly the same number of businesses were open at the beginning of July as were open at the end of the month. This means July was the first month since March that saw declines in activity. 

main street health metrics

As for employment, a fewer number of employees were working, and the employees that were on the job worked slightly fewer hours. 

While some areas of the country are still improving, declines in other regions led to an overall slight decrease in activity.

May and June improvements did not extend into July

Fewer employees were working at the end of the month, relative to the beginning of the month. This is in line with the recent uptick we’ve seen in unemployment claims. 

percentage of employees working relative to january

Furthermore, “late open” states like New York and New Jersey are now almost at the level of “early open” states like Texas and Florida, despite reaching much higher closure rates. 

businesses open july

What does this mean for unemployment? 

We could see improvements in unemployment numbers. The working metric among our employees improved from the June sample period to the July one. 

However, almost all of this gain happened in the last weeks of June. The report might not reflect the current weakening in the labor market (a weakening the Census Household pulse survey also picked up). 

Below is the percentage of employees working (during sample period), compared to January baseline:

  • July: -23%
  • June: -27%
  • May: -42%
  • April: -60%

Expiration of unemployment benefits 

The expiration of UI benefits will likely harm hourly workers, without leading to more people returning to work. Economists from Yale, using Homebase data, found no evidence to support the claim that enhanced UI benefits leads to fewer people returning to work. 

controls for state business restrictions

Instead, they found that the main driver was a lack of available jobs. For more information, read the Yale report here

How has Homebase data been validated? 

We’ve partnered with a number of academics and researchers to validate and improve the Homebase data. Here are a few examples: 

  • The St. Louis Federal Reserve suggested that Homebase data could be predictive of the jobs reports.
  • Researchers at Drexel used Homebase data to estimate the “true” employment level. 
  • A team at UChicago and Berkeley used Homebase data to show disparate impacts across different groups.

Do you have any questions or comments about our findings? Contact Homebase VP of Data & Analytics Ray Sandza and Senior Analyst Andrew Vogeley to learn more. 

Homebase makes work easier for 100,000+ small (but mighty) businesses with everything they need to manage an hourly team: employee scheduling, time clocks, team communication, hiring, onboarding, and compliance. We are not Human Capital Management. We are not HR Software. We’re tools built for the busiest businesses, so owners and employees can spend less time on paperwork and more time on what matters.

An update on small business as COVID-19 cases rise

As we did in June, we took a look at Homebase data to get a better understanding of what small business activity looks like as some areas of the United States experience a spike in coronavirus cases. 

With over 60,000 businesses and one million active hourly employees, we were able to see how the spikes are impacting currently Main Street. 

Here are our most recent findings. 

Declines after 2+ months of recovery

Areas that have seen a spike in coronavirus cases are seeing declines in business activities, although the declines are not as steep as during the first wave of cases. 

Hiring for hourly workers, however, is now below the levels we saw before the coronavirus pandemic. After staying elevated in the immediate aftermath of the first wave,  applicants and job post levels are also depressed. 

A divergence among states

After months of similar trends, we’re noticing a split among different locations. States like Arizona, Florida, and Texas have seen the number of hours worked decline since cases began to spike at the end of June. These states reopened earlier than the rest of the country, but as cases spiked, they saw a reversal of trends, relative to slower-opening states. 

hours worked compared to january

States hit hardest at the beginning of the pandemic, including Massachusetts, New Jersey, and New York, have steadily improved and, despite a deeper trough, are almost even with states that re-opened earlier and are now experiencing a second wave of cases. 

A slowdown in hiring

Hiring levels at small businesses remain below pre-COVID levels and the number of workers applying for those jobs has fallen to levels below what we saw before the coronavirus pandemic as well.

We saw a spike in the number of applicants and job posts at the beginning of the crisis. However, this large number of applicants were applying to a dramatically lower level of available jobs. 

Application rates remained elevated in the months following the beginning of COVID-19, despite safety concerns among hourly workers. However, application rates have fallen over last month, perhaps as workers become discouraged by the lack of jobs and fear increases in coronavirus cases.

hiring activity and behavior

All data is taken from Homebase’s Hiring product. This tool allows owners to post jobs, track applicants, and ultimately hire employees for their teams. 

Constrained childcare

As the country debates whether or not to reopen office buildings and schools, we could be faced with a childcare availability issue—around 20% of these types of locations remain closed. A constrained childcare situation may complicate the ability of the economy to “get back on track.”

childcare establishments

How has Homebase data been validated? 

We’ve partnered with a number of academics and researchers to validate and improve the Homebase data. Here are a few examples: 

  • The St. Louis Federal Reserve suggested that Homebase data could be predictive of the jobs reports.
  • Researchers at Drexel used Homebase data to estimate the “true” unemployment rate. 
  • A team at UChicago and Berkeley used Homebase data to show disparate impacts across different groups.

Do you have any questions or comments about our findings? Contact Homebase VP of Data & Analytics Ray Sandza and Senior Analyst Andrew Vogeley to learn more. 

Homebase makes work easier for 100,000+ small (but mighty) businesses with everything they need to manage an hourly team: employee scheduling, time clocks, team communication, hiring, onboarding, and compliance. We are not Human Capital Management. We are not HR Software. We’re tools built for the busiest businesses, so owners and employees can spend less time on paperwork and more time on what matters.

Main Street health: How did businesses fare in June?

To get a picture of what business looked like for main street establishments across the U.S. last month, we turned to our own data here at Homebase. With over 60,000 businesses and one million active hourly employees, we were able to compare data from recent days in June to that of the average weekday from the period of Jan 4, 2020 through Jan 31, 2020.

Here’s what we found. 

How did Main Street fare during June? 

Based on our data, Main Street activity continued to improve throughout the month of June. However, the pace of improvement was slower in June than in May—particularly toward the end of the month. 

The positive jobs report, while a good sign, likely overstates the economic health of Main Street businesses. In fact, we’ve already begun to see the negative impact of increases in COVID-19 cases in some states on small businesses.

Even before cases increased, some states were hitting a reopening plateau, suggesting we might see around 20% of small businesses close permanently. Still, cities that remained locked down longer still lag in terms of total recovery, and the recovery has differed across industries, with retail bouncing back more quickly than food and drink.

Small business recovery continued 

The good news: fewer businesses were closed at the end of June than they were at the beginning of the month, with more employees working more hours. 

The not-so-good news: You can see a recent plateauing that will likely continue, or worsen, given new coronavirus case rates and associated impacts on lockdowns and customer demand.

main street health metrics june

However, the pace of improvement was slower than May. We saw a 37% improvement over the course of May, compared to a 6% increase over the course of June. According to our data shown in the graph below, only 51% of employees were working at the beginning of May that were working in January.

percent of employees working june

What should we make of the jobs recovery report? 

While we saw an overall increase in Main Street business activity in the month of June, our date leads us to believe this is likely a false signal for optimism. Over the last week, we’ve seen flattening and slight downward trends, a stark contrast to the upward curves we’ve seen since the lowest point in April.

main street health june

Had we seen a continuation of the trends we saw in early June, we would have expected the 6/26 number on the graph above to be -20%—instead it’s up from the previous week. Because the jobs report only measures data for the week containing June 12, the data is already stale in this rapidly changing economic environment. 

An increase in cases 

An increase in COVID-19 cases in states like Arizona, Florida, and Texas—which collectively make up a group we’re calling “Wave 2” states—have seen a decline in hours worked, as you can see in the graph below. 

hours worked june

Even before concerns arose over the increase in cases, the “Wave 2” states were experiencing plateauing levels of activity. In fact, the declines preceded the re-implementation of lockdowns and restrictions. 

Differential improvement

While cities like New York and San Francisco had lower troughs, they’ve steadily improved as cities like Houston and Phoenix have plateaued or given back some of their early gains. These plateaus suggest around 20% of Main Street businesses are closing permanently. 

june benchmarks

Differential impacts

We can get a sense of how “surviving” businesses are doing by taking a look at the number of hours worked per open location. For example, retail businesses that are open are operating at levels slightly above pre-pandemic, suggesting survivors have thrived and perhaps taken market share from their still-closed competitors. 

hours worked per open location compared to january

Businesses in the food and drink industry, however, are still below the benchmark. This is because restrictions on capacity levels have a larger negative impact on operations, given the nature of those businesses. 

How has Homebase data been validated? 

We’ve partnered with a number of academics and researchers to validate and improve the Homebase data. Here are a few examples: 

  • The St. Louis Federal Reserve suggested that Homebase data could be predictive of the jobs reports.
  • Researchers at Drexel used Homebase data to estimate the “true” unemployment rate. 
  • A team at UChicago and Berkeley used Homebase data to show disparate impacts across different groups.

Do you have any questions or comments about our findings? Contact Homebase VP of Data & Analytics Ray Sandza and Senior Analyst Andrew Vogeley to learn more. 

Homebase makes work easier for 100,000+ small (but mighty) businesses with everything they need to manage an hourly team: employee scheduling, time clocks, team communication, hiring, onboarding, and compliance. We are not Human Capital Management. We are not HR Software. We’re tools built for the busiest businesses, so owners and employees can spend less time on paperwork and more time on what matters.

Homebase shines a light on regional unemployment trends

Last Friday, the Bureau of Labor Statistics (BLS) released their monthly jobs report and it took the policy and economics world by storm.  A survey of 78 economists predicted that the economy would lose another 7.5 million jobs; the most optimistic guess in the group was a loss of 800K jobs. 

In reality, the economy gained 2.5 million jobs.  The biggest driver of this gain was a massive employment turnaround in the Leisure & Hospitality sector which lost 7.5M jobs in April but actually gained 1.2 million jobs in May.

While the number of workers out of a job is still at a historically low level—13.3%—beating expectations by this much was undoubtedly a positive sign for the economy and the recovery from this pandemic.

From our seat, though, we were surprised no one saw this coming.  Since the pandemic began, we have made Homebase data public to help policymakers and our customers understand what is happening.  Our dataset tracks 60,000 Main Street businesses that were active at the beginning of March and looks at how many are open—and at what operating levels—every day since.  

If you look at the data, it’s easy to see a steady, if slow, recovery from the depths of the shutdowns in mid-April:

employment graph

Lest you accuse us of drinking our own Kool-Aid and getting lucky, on Tuesday the St. Louis branch of the Federal Reserve published findings validating that our data is, in fact, predictive of the jobs report since the coronavirus pandemic began.

Given this validation, we are publishing state- and city-level changes over the period May 1st to May 29th so you can see how Main Street in your region has been faring during what we all hope is the beginning of a permanent, and speedy, recovery.

First, some clarification about our data might be helpful:

  • This dataset is based on Homebase data for over 60,000 main street businesses and 1 million hourly employees active in the US in January 2020. All the rates compare that day vs. the median for that day of the week for the period Jan 4, 2020 – Jan 31, 2020.
  • “Employees working” is based on the distinct number of hourly workers with at least one clock-in.  I focus on that metric in this post as it most closely aligns with the spirit of the jobs report
  • We also make data on “Hours Worked” and “Businesses Open” available on our public data portal
  • Finally, some of the improvement numbers below may look shockingly high.  It’s important to remember that that’s a reflection of just how bad things got by the end of April.  As an illustrative example: If hours worked dropped to 50% of January levels by the end of April, and then improved by 50%, you’d still be at only 75% of January levels.  It’s going to take lots of months like May to get us anywhere near normal again.

Ok, now that all the fine print is out of the way, let’s dive in!

10 cities and states with biggest relative
improvement in Employees Working

State Percent growth during May End of May, relative to Jan ‘20 level
NH 102% -27%
VT 72% -38%
IN 61% -21%
WV 56% -27%
MI 56% -39%
KY 56% -27%
OH 53% -21%
CT 52% -41%
NV 51% -38%
WI 50% -14%
City Percent growth during May End of May, relative to Jan ‘20 level
Louisville 86% -23%
Cincinnati 57% -25%
St. Louis 55% -23%
Columbus 51% -18%
Miami 51% -40%
Boston 49% -49%
Jacksonville 49% -13%
Indianapolis 49% -25%
Nashville 48% -25%
Pittsburgh 48% -43%

 

10 cities and states with smallest relative
improvement in Employees Working

State Percent growth during May End of May, relative to Jan ‘20 level
MN 6% -39%
ND 14% -17%
UT 19% -5%
VA 23% -37%
NM 25% -34%
OK 26% -14%
IL 27% -42%
TX 28% -23%
WA 28% -34%
GA 29% -26%
City Percent growth during May End of May, relative to Jan ‘20 level
Minneapolis 0% -41%
Kansas City 2% -19%
Virginia Beach 20% -33%
Richmond 21% -39%
Portland 22% -42%
Dallas 25% -26%
Los Angeles 25% -40%
Washington DC 25% -45%
Salt Lake City 26% -22%
Houston 26% -28%

 

Full Employees Working results for all states

State Percent growth during May End of May, relative to Jan ‘20 level
AK 31% -14%
AL 36% -20%
AR 37% -23%
AZ 39% -27%
CA 30% -38%
CO 36% -23%
CT 52% -41%
DE 29% -29%
FL 46% -31%
GA 29% -26%
HI 40% -51%
IA 37% -10%
ID 30% -6%
IL 27% -42%
IN 61% -21%
KS 34% -5%
KY 56% -27%
LA 36% -36%
MA 47% -51%
MD 36% -34%
ME 38% -30%
MI 56% -39%
MN 6% -39%
MO 33% -14%
MS 35% -19%
MT 33% -9%
NC 42% -30%
ND 14% -17%
NE 29% -7%
NH 102% -27%
NJ 39% -42%
NM 25% -34%
NV 51% -38%
NY 37% -55%
OH 53% -21%
OK 26% -14%
OR 35% -33%
PA 38% -41%
RI 49% -33%
SC 41% -14%
SD 32% 20%
TN 38% -17%
TX 28% -23%
UT 19% -5%
VA 23% -37%
VT 72% -38%
WA 28% -34%
WI 50% -14%
WV 56% -27%
WY 42% -14%

Full Employees Working results for top cities represented in the data

City Percent growth during May End of May, relative to Jan ‘20 level
Atlanta 29% -29%
Austin 43% -17%
Baltimore 33% -34%
Birmingham 41% -25%
Boston 49% -49%
Buffalo 41% -42%
Charlotte 36% -29%
Chicago 29% -45%
Cincinnati 57% -25%
Cleveland 40% -28%
Columbus 51% -18%
Dallas 25% -26%
Denver 35% -31%
Detroit 34% -59%
Hartford 42% -41%
Houston 26% -28%
Indianapolis 49% -25%
Jacksonville 49% -13%
Kansas City 2% -19%
Las Vegas 45% -43%
Los Angeles 25% -40%
Louisville 86% -23%
Memphis 33% -10%
Miami 51% -40%
Milwaukee 37% -12%
Minneapolis 0% -41%
Nashville 48% -25%
New Orleans 39% -48%
New York 39% -58%
Oklahoma City 35% -16%
Orlando 47% -31%
Philadelphia 28% -47%
Phoenix 33% -27%
Pittsburgh 48% -43%
Portland 22% -42%
Providence 45% -34%
Raleigh 33% -31%
Richmond 21% -39%
Riverside 32% -28%
Sacramento 30% -35%
Salt Lake City 26% -22%
San Antonio 35% -22%
San Diego 35% -35%
San Francisco 29% -52%
San Jose 34% -36%
Seattle 27% -40%
St. Louis 55% -23%
Tampa 43% -24%
Virginia Beach 20% -33%
Washington DC 25% -45%