US small business hiring growth rebounds slightly, but not in all regions

Dive Brief:

Small business hiring grew 1.82% seasonally adjusted in June, according to an index maintained by financial services and consulting firm CBIZ. This marked a "vast upswing" from declines recorded in April and May, the firm said in a July 1 statement.
More than half of companies in the index maintained flat hiring growth last month, while nearly one-third (30%) increased hiring. CBIZ observed a trend of hiring increases across businesses in all but one of the four U.S. regions it tracks — the West.
Among industries in the index, accommodation and food services recorded double-digit hiring growth, CBIZ said, while hiring in retail trade; real estate; arts and entertainment; and construction also grew. "The June data displays the first real signs of hiring growth since the COVID-19 pandemic prompted nationwide business closures and pullbacks in March," CBIZ executive vice president Philip Noftsinger said in a press release.

Dive Insight:

The company's findings generally match those of other firms. Research data published last month by IHS Markit and HR outsourcing firm Paychex found small business employment grew by 0.25% in May following pandemic-induced declines through April (despite a year-over-year decline of 3.95%). The same index "moderated slightly" in June, according to a June 30 update.

Other reports have captured a degree of optimism among U.S. small business owners. A joint survey published last month by The Harris Poll and HR services firm TriNet found 64% of small and midsize business owners expected their businesses to emerge either stronger than or the same as they were prior to the pandemic, despite most reporting declining revenues and workforce reductions. A recent survey from the Society for Human Resource Management found 52% of small business owner respondents expected to recover to pre-COVID-19 profitability within six months or less.

But those findings have also run up against observations that the pandemic has affected some businesses worse than others. That impact is disproportionately affecting women and people of color who are business owners, HR Dive previously reported. For example, female-owned and equally female and male-owned businesses comprise 39% of the organizations facing immediate risk from COVID-19, according to a Brookings Institution report, compared to 29% of business in industries at near-term risk and 36% at long-term risk.

Hiring freezes emerged as a very common organizational response early on in the pandemic: 4 in 10 North American companies either implemented such a freeze or reduced hiring, according to an April survey by Willis Towers Watson.

Federal efforts including the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) have sought to provide relief to small businesses and nonprofits in the form of partially forgivable loans. But the CARES Act has been criticized by some groups for not going far enough to support small businesses. That includes the nonprofit Center for Responsible Lending, which said banks have distributed the funds "to businesses with payrolls larger than many small businesses and most businesses of color" and "are also prioritizing their existing customers, further shutting out most business owners of color and others who do not have these relationships."