High-frequency labor market measures for workers at small businesses

Overview

As evidenced by both the Pandemic Recession and Great Recession, labor markets can change rapidly. More granular data on the time-path of these changes, and the role played by firm closures, layoffs, hours changes, and worker turnover can help us better understand how the labor market is evolving. On this site, we will post weekly updates of labor market information from Homebase’s timecard data to shed light on the details of a rapid evolving labor market. We aim to measure the short- and medium-term evolution of the size of the small business sector and of the health of employers in this sector, by tracking whether firms in Homebase’s userbase are expanding or contracting the number of hours that they use each week and the rate of turnover among their workers.

Below, we present three sets of figures on the recent labor market trajectory of workers at small businesses. Figure 1 shows how total hours at existing small businesses have evolved during recent weeks, providing an overall picture of how this segment of the labor market has been faring. Figure 2 then shows how total hours of the original workers at the same small businesses have evolved, providing a picture of worker turnover at these small firms. For each, we show estimates for both the most recent 12 weeks and the last year. Figure 3 then decomposes the overall change in hours shown in Figure 2 into the part driven by firm shutdowns, the part driven by net changes in the number of employees, and by changes driven by the number of hours per worker.

Homebase data

Homebase provides scheduling and time clock software to tens of thousands of small businesses employing hundreds of thousands of workers across the US and Canada. This scheduling software generates granular data on exact hours worked every day for all hourly employees at customer firms, providing a much higher-frequency and more detailed picture of employment and hours than traditional labor market datasets. This greater detail and higher frequency come at some costs; Homebase’s customer base is disproportionately composed of small firms in food service, retail, and other sectors that employ many hourly workers. The data exclude most salaried employees, firms who do not require this type of scheduling software for their operations, and larger firms who would use their own software for this purpose. Consequently, insights derived from the Homebase data should be viewed as relevant to hourly workers in small and medium sized businesses, rather than to the labor market at large.

Despite these limitations, we think these data provide valuable information for two main reasons. First, hourly workers at small businesses are an important sector of the labor market whose outcomes may not always be captured by traditional labor market data. Second, hourly employees are one of the easiest employment margins for firms to adjust, so measuring changes in outcomes for these workers may provide a more real-time picture of the labor market than other types of workers whose hours firms find more difficult to adjust.

Figure 1: Total small business hours as a share of the baseline

These figures report the total number of hours worked per week at small businesses over a 12 week (Panel A) or 50 week (Panel B) time period relative to average hours of the same firms during a two week base period immediately preceding the period reported (13-14 weeks for Panel A and 51-52 weeks in Panel B). Firms are included in the graph if they reported employing workers who worked at least 80 total hours during the base period. The blue line reports this series for the past 12 or 50 weeks, while the dark grey and light gray report this series for the same period one year (dark grey) and two years ago (light gray) respectively. When the base period overlaps with a holiday week, we extend the base period until it includes two weeks that do not contain a holiday and include only these two non-holiday weeks in the normalization.

Panel A: 12 Weeks
Panel B: 50 Weeks

Figure 2: Original worker hours at small businesses as a share of baseline hours

These figures report the total number of hours worked per week of workers at small businesses over a 12 week (Panel A) or 50 week (Panel B) time period relative to average hours of the same workers during a two week base period immediately preceding the period reported (13-14 weeks for Panel A and 51-52 weeks in Panel B). Workers are included in the figure if they worked any hours at a firm that employed workers who in total worked at least 80 total hours during the base period. Workers who did not work any hours at such a firm in the base period are not included in the graph. As a result, the series trends down whenever there is worker turnover, even if the outgoing workers are replaced by new hires. The blue line reports this series for the past 12 or 50 weeks, while the dark grey and light gray report this series for the same period one year (dark grey) and two years ago (light gray) respectively. When the base period overlaps with a holiday week, we extend the base period until it includes two weeks that do not contain a holiday and include only these two non-holiday weeks in the normalization.

Panel A: 12 Weeks
Panel B: 50 Weeks

Figure 3: Contributions of shutdowns, changes in number of employees, and changes in hours per employee

These figures decompose the total change in weekly hours at small businesses over a 12 week (Panel A) or 50 week (Panel B) time period into the changes driven by firm-shutdowns (i.e. firms not reporting any worker hours during a given week, shown in light blue), employment changes (i.e. changes in the number of employees reporting hours during the given week, shown in dark blue), and changes in the number of hours per worker (shown in light green). These add up to the total net change in hours, shown by the black plus sign. Hours are reported as percent changes relative to average hours of the same firms during a two week base period immediately preceding the period reported (13-14 weeks for Panel A and 51-52 weeks in Panel B). Firms are included in the graph if they reported employing workers who worked at least 80 total hours during the base period. When the base period overlaps with a holiday week, we extend the base period until it includes two weeks that do not contain a holiday and include only these two non-holiday weeks in the normalization.

Panel A: 12 Weeks
Panel B: 50 Weeks

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