New Research Links COVID Vaccine to SMB Recovery

A new report from Gusto—a payroll and HR software vendor that provides services to more than 100,000 small businesses in the United States—shows a direct correlation between COVID-19 vaccination rates and SMB employment growth. Especially as new COVID-19 variants are casting an ominous shadow, this report illustrates how prioritizing public health at federal, state, and local levels is the surest way to speed up economic recovery for small businesses.

In the report, Gusto uses platform data, state-level weekly hiring trends, COVID-19 case counts from The New York Times tracker, and vaccination rates from Oxford University’s COVID-19 vaccination tracker. The research suggests that states where more people are vaccinated have a higher rate of economic recovery, and states where vaccination rates are slow have a similarly slow rate of SMB employment growth. Read the full report on Gusto’s company news page here.

New COVID-19 cases mean slower employment growth

Gusto’s report found an inverse relationship between the percent change in new daily COVID-19 cases and the percent change in headcount for small businesses. States with the highest percent change in new cases had the slowest employment growth. 

This suggests that states with the poorest COVID-19 response are also expected to have the longest timeline to economic recovery for SMBs.

In fact, the report states that a 10 percentage point increase in new COVID cases correlates to a 0.1 percentage point slower rate of headcount growth among small businesses. This suggests that states with the poorest COVID-19 response are also expected to have the longest timeline to economic recovery for SMBs.

Most notably, the states with the slowest small business employment growth rates are Kansas, Mississippi, Georgia, and Nebraska

Chart of COVID-19 case growth and service-sector small business employment growth

Figure 1: COVID-19 Case Growth and Service-Sector Small Business Employment Growth

Credit: Gusto

COVID-19 vaccinations mean faster employment growth

In contrast, Gusto found a strong positive relationship between a state’s COVID-19 vaccination rate and its employment growth rate. The more fully vaccinated adults a state has, the faster that state’s small businesses can open their doors.

The report states that a one percentage point increase in the share of adults fully vaccinated increases a state’s small business employment growth by 0.1 percentage points. These states have prioritized vaccine distribution, and their small businesses have been able to recover more quickly from the pandemic as a result.

According to the data, the states with the highest small business employment growth rates are Vermont, Delaware, Montana, and Maine.

Chart of adult vaccination rates and service-sector small business employment growth in the United States.

Figure 2: Adult Vaccination Rates and Service-Sector Small Business Employment Growth

Credit: Gusto

Kaiti Norton
Kaiti Norton is a Nashville-based Content Writer for eSecurity Planet, Webopedia, and Small Business Computing. She is passionate about creating relatable, research-based content that helps small businesses thrive. When she's not writing about small business technology, she's sharing her musings about fashion, cats, books, and skincare on her blog.

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