How much is the coronavirus pandemic impacting hourly workers?

UChicago researchers find 90% reduction in hours for employees in leisure, entertainment

The coronavirus pandemic has forced the widespread closures of restaurants, barbershops and other non-essential business. Where does that leave those employees?

Scholars from the University of Chicago and the University of California, Berkeley have launched a new research project to quantify the effects on hourly workers, using data from nearly 40,000 small- and medium-sized businesses. Their early results include hour reductions ranging from 50% to 90%, with leisure and entertainment industries among those suffering the greatest losses.

By partnering with Homebase, a scheduling and time clock software company that updates its information daily, the researchers can create timely snapshots for policymakers—helping them respond more quickly than they would using most labor data sources.

“What is distinctive about the research is that we will have access to real-time data by industry and state that will help inform policymakers at every level about the key steps that must be taken to ensure the future viability of small businesses and their employees,” said Marianne Bertrand, the Chris P. Dialynas Distinguished Service Professor of Economics at the University of Chicago Booth School of Business.

Bertrand is the faculty director at the Rustandy Center for Social Sector Innovation and at UChicago Poverty Lab. Researchers are analyzing daily timecard data for Homebase clients in the United States, tracking changes in hours worked before and after the COVID-19 crisis began. They will post frequent updates to measure how the impact is spreading across the country—geographically and by industry—and how those effects change in response to state and local social distancing guidelines and orders.

Based on data from Jan. 1 through April 8, their key findings include:

  • By March 22, 40% of Homebase’s clients, predominantly small and medium-sized firms, had shut down, at least temporarily. By the week of March 22, 91% of firms had fewer hours as compared to late January.
  • Hourly reductions vary by industry and essential vs. non-essential workers. The largest reductions in hours were in beauty and personal care and in leisure and entertainment, where hours declined over 90%. The smallest hour reductions occurred in industries like home and repair and transportation, but even those industries saw reductions of about 50%.
  • Reductions started earlier in stay-at-home states, but happened everywhere by March 16.
  • Hour reductions were caused primarily by firm shutdowns and reductions, not layoffs.

One of five Urban Labs based at the Harris School of Public Policy, the University of Chicago Poverty Lab partners with civic and community leaders to study and address barriers to social mobility and racial equity. The Rustandy Center for Social Sector Innovation is the destination at Chicago Booth for people committed to helping solve complex social and environmental problems. The Poverty Lab and the Rustandy Center are collaborating on a series of joint research projects to better understand the impact of the COVID-19 crisis on small businesses and households.

Their first results using Homebase data were produced in collaboration with the Institute for Research on Labor and Employment and the California Policy Lab at the University of California, Berkeley.

“Hourly workers tend to be the most vulnerable during an economic downturn like this. Understanding how they’re being affected is critical for policymakers who are considering how to better support this workforce,” said UC Berkeley economist Jesse Rothstein, director of the Institute for Research on Labor and Employment and the California Policy Lab.

—Adapted from a story that was published on the Harris Public Policy website.