If the drop-off in Georgia’s economy in the first quarter of 2020 was dramatic, then it is equally useful to use that same word “dramatic” to describe the shape of the state’s recovery in early 2021.
New government surveys provide additional light on how strongly Georgia’s economy is rebounding after Covid-19 closures and restrictions throttled Georgia’s economy a year ago.
Business Formations Survey
The first step for an individual wishing to set up a new
business is an application for an Employer Identification Number (EIN) that can
grant the company or nonprofit enterprise other benefits such as applying for a
business license or to hire employees.
The Census Bureau tracks the number of EIN applications as an
economic measure of early-stage business activity. Even during the initial pandemic
shutdown months in the first quarter of 2020, the number of applications for
EINs in Georgia remained high with more than 85,000 applications received
between January to May 2020. (Business Formation
Statistics (BFS) (census.gov))
For the first five months of 2021, this number almost
doubled to more than 163,000 applications indicating a large interest in the
formation of new businesses in the state.
Data on business formations by county lag the statewide
numbers, but Census has just released data for Georgia counties in 2020.
As expected, the counties with the largest existing employment
also tend to have the largest number of new business formations, and since
these are in the Atlanta metro area, counties in the Atlanta metro area lead
the list. In 2020, Fulton County reported 51,935 applications, up by more than
18,000 from 2019. DeKalb County was second with 31,442 applications (up by
almost 13,000) and followed by Gwinnett County with 29,296 (up by almost 8,9000)
and Cobb County at 23,941 (up by more than 7,6000). Clayton County came in
fifth on the list with 14,733 new applications, up by more than 7,400 over 2019.
No other Georgia county showed greater than 10,000 new applications in 2020.
Counties showing fewer applications in 2020 as compared to
2019 included Rabun, Evans, Glascock, Towns, and Colquitt counties.
Because a company that ceases operations may still retain
their EIN, there is no information on the number of companies that may have
ceased operations.
Job Openings and Labor Turnover Survey
Job openings in the state reached 313,000 in March 2021, up from
170,000 for the same month a year ago, while the number of layoffs and discharges
fell from 293,000 in March 2020 to 51,000 in March 2021, according to new
information released by the Bureau of Labor Statistics as part of their
experimental Job Openings and Labor Turnover Survey states estimates (JOLTS Experimental State
Estimates).
While job openings express a level of optimism on behalf of
employers, the number of hires represent a real economic cost to employers, and
here again, hires in Georgia in March totaled 193,000 compared to 147,000 a year
ago. The hires rate for the state came in at 4.3 compared to 3.2 last year.
Equally impressive, the number of voluntary quits increased
over the year from 76,000 in March 2020 to 124,000 in March 2021 with the Quits
rate jumping from 1.6 to 2.8. Quits are seen as an important indicator as how
much confidence workers have in their ability to find a new position. While the
quits rate has been higher in the past, the current level still shows optimism from
workers about their employment futures, at least sufficiently that they believe
they are finding better opportunities by changing jobs.
Current Employment Statistics
For all the positive indicators highlighted above, the good
news on Georgia’s economic picture must be tempered by the recognition that the
state has not yet completely regained levels reached before the 2020 economic
downturn.
In May, Georgia achieved an unemployment rate of 4.1
percent, much better than the 9.4 percent rate in May 2020, buy still above the
3.6 percent rate in May 2019, according to data from the Bureau of Labor Statistics.
In the same manner, while the number of unemployed in the
state has been cut in half since last May, it is still some 28,000 higher than
in May 2019, while the state’s nonfarm employment is still 125,000 short of its
May 2019 level.
Georgia nonfarm employment, Jan. 2019 to May 2021, seasonally adjusted
All this points to the fact that while the state’s economy continues to make a record rebound from the 2020 downturn, the state’s labor force needs continued employment growth to catch up with its pre-Covid job levels.
