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Initial Impacts of the COVID-19 Recession on Employment & Establishments

The arrival of the virus that causes COVID-19 in Minnesota in early 2020 and subsequent steps to slow its spread sparked immediate and severe widespread economic damage. Although several aggregate statistics describe the magnitude of this damage, many details on the impact on businesses and industries have been missing from the picture.

Mustapha Hammida from DEED's Labor Market Information Office provides an in-depth look at the immediate impact of COVID-19 on Minnesota businesses by analyzing data from the Quarterly Census of Employment and Wages (QCEW) program. It compares the net job loss during the COVID-19 recession to the previous two recessions, quantifies the impact of COVID-19 on businesses during March and April 2020, and evaluates the initial extent and duration of business closures due to COVID-19.

Hammida also extended the analysis of monthly business employment dynamics utilized in the first article of this series to investigate how the COVID-19 recession impacted Minnesota firms of different size classes during March and April 2020. During that time frame, 410,736 jobs were lost and 10,492 businesses were closed. The number of job-creating businesses shrunk while the number of job-destroying businesses skyrocketed, with significant differences in levels and rates across industries, and this study shows, by firm size class. Five size classes are considered: very small: 1 to 4 employees, small: 5 to 9 employees, medium: 10 to 49 employees, large: 50 to 249 employees, and very large: 250 or more employees.

Hammida also produced a three-article series which illuminates our understanding of the effects of COVID-19 on the distribution of hourly wages of Minnesota workers. The first article in the series introduces the hourly wage distribution of Minnesota workers in second quarter 2019. The second article answers two main questions. First, how did the distribution of hourly wages of Minnesota workers change over the last five years? Second, how is the recent burst in inflation influencing growth in the average hourly wages of workers and along the whole wage distribution? Constructing and comparing the statistical distributions of hourly wages of workers before, during and after the Pandemic Recession allows us to analyze how COVID and its aftermath affected the wage distribution and its properties. The third article will address how changes in the composition of employment affect the measure of aggregate average hourly wage growth in general and during the Pandemic Recession.

Because of the social role of restaurants as gathering places and the universal nature of food as a necessity and an enjoyment, possibly the most disrupted industry was food and hospitality. While the COVID-19 pandemic disrupted industry and workers worldwide, those impacts were felt at different times and scales in different places and industries. DEED Research Analyst Amanda Rohrer studies the impact on the restaurant industry in this article.

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