Number of worker shifts falls in August as delta variant weighs on small businesses

Fewer small businesses were open and hourly employees working in August from July, indicating that the Covid-19 delta variant may be dampening the U.S. economic recovery, according to data from Homebase, which supplies employee scheduling software to employers.

The number of employees working dropped 4% in mid-August versus mid-July, according to Homebase, which analyzed trends among roughly 60,000 businesses and 1 million hourly employees. The share of businesses with their doors open also fell 2.5% over that period.

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The monthly shifts are noteworthy since the economic metrics have generally been on an upward trajectory since April, according to John Waldmann, the company’s founder and CEO.

“The leading indicators here of Main Street health and hourly employment are showing a real change from the trends earlier in the summer, and what seems to be a very clear impact of the delta variant on the economy,” he said.

Covid cases, hospitalizations and deaths have climbed steadily through July and August, fueled by the delta variant and largely occurring among unvaccinated individuals.

By the end of August, there were roughly 150,000 new Covid cases a day on average, up from about 14,000 on July 1, according to the Centers for Disease Control and Prevention. New cases seem to have leveled off in recent days.

Virus-related deaths also nearly quadrupled over that period, to almost 1,000 a day, on average, from 226, according to the CDC.

About 63% of U.S. adults are fully vaccinated, according to CDC data. That’s true for about 52% of the total population, including kids.

Consumer confidence fell to a six-month low in August, partly on virus fears.

In July, the Conference Board’s consumer confidence index had been at its highest level since the initial Covid outbreak in early 2020, according to Jim Baird, certified financial planner and chief investment officer at Plante Moran Financial Advisors in Kalamazoo, Michigan.

“The emergence of the delta variant has cast a shadow on that optimism, creating a growing recognition that the risk presented by Covid-19 is not yet in the rear-view mirror,” Baird said.

The delta variant may impact employees and businesses in a few ways, Waldmann said. Consumer foot traffic and demand may fall if customers try to limit their in-person activities; businesses may respond to any in-house virus cases by reducing staffing or temporarily closing their doors, he said.

All states except Arizona, Maine and South Dakota saw an employment decline in August, as measured by the number of hourly workers with at least one clock-in, according to Homebase. The monthly decline was largest in the Southeast region — a 5.6% loss, more than double the 2.3% drop in New England, according to Homebase.

The decline in worker numbers has affected certain industries harder than others. In entertainment and hospitality, for example, the figures fell by 35% and 20%, respectively, from their July peaks, according to Homebase.

Meanwhile, private-sector jobs jumped by 374,000 in August, according to payroll provider ADP, well below the Dow Jones estimate of 600,000. The Bureau of Labor Statistics releases its monthly jobs report on Friday.

The U.S. economy is still down almost 6 million jobs versus pre-pandemic levels.