We use worker-firm matched data from Homebase to construct new real-time estimates of the impact of the Covid-19 pandemic on employment and hours worked of small businesses. We find four key results: (1) employment of small businesses in four of the hardest hit service sectors contracted by an estimated 18.2 million between mid-February and mid-April \u2013 a staggering 60% decline \u2013 with more than half of the decline due to business closures; (2) small business employment has recovered by 9.1 million since mid April and more than half of the closed businesses have reopened, but this recovery has almost completely stalled; (3) small businesses have rehired a large share of previously furloughed workers but their employment remains almost 20% below pre-pandemic levels; (4) average weekly hours of job stayers declined sharply in the second half of March but have since fully recovered. The estimates highlight the key role that small business closures and reopenings play not only for the dramatic decline in service sector employment but also for the recovery. Our analysis indicates that while the recovery has been surprisingly swift and large, small business employment remains far below pre-pandemic levels and unless many of the still closed businesses reopen, service sector<\/p>\n
employment will remain persistently lower.<\/p>\n
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