New study finds link between small biz job growth and vaccination rates

There appears to be a link between states seeing a strong rebound in a slice of small business hiring: higher vaccination rates.

Driving the news: A new report by payroll processing firm Gusto says places with a bigger share of their population fully jabbed also saw bigger instances of job growth in the service sector.

The backdrop: COVID-19 — and fears of contracting the virus — top the list of reasons why unemployed workers are hesitant about returning to work, recent surveys show.

• "If people are nervous about the Delta variant, that could slow [the] labor market recovery," Minneapolis Fed President Neel Kashkari told Face the Nation yesterday.

• On the employer side: "There's a relationship between public health and small business health," says Gusto economist Luke Pardue.

How it works: Gusto looked at employment growth within "people-facing" industries, like restaurants, bars or retail shops.

• But, but, but: The data stops short of showing bigger employment growth is happening because vaccination rates are higher. Other variables are at play — include fluctuating demand that could affect staffing needs.
• "Some of the areas where we've seen relatively strong employment growth in recent months have lower vaccination rates — but they're also tourist destinations," says Wells Fargo economist Sarah House.

What to watch: Businesses are starting to step up mandates for employees and customers alike — among the latest: high-end gym Equinox — in a move that may juice vax rates.