Busy Season Barometer:
Bracing for the Coronavirus recession
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By Beth Bellor
The tax and accounting profession was adding new jobs at a rate of 2.3 percent per year before the Coronavirus outbreak, according to CPA Trendlines Research.
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But with a new recession looming, CPA Trendlines estimates the profession could lose up to 100,000 jobs and take up to seven years to recover.
The latest data available show more than a million employees in the profession, and growing at about 2,800 new jobs per month. At the same time, wages are hitting record highs.
But with the Coronavirus crisis threatening a new recession, CPA Trendlines conducted a long-term, 30-year analysis, focused on the job losses caused by the dot-com crash of 2001 and the financial meltdown of 2007. From the analysis, CPA Trendlines calculates the profession could shed up to 10 percent of its current workforce, and not fully recover for two to seven years.
In this report, CPA Trendlines highlights:
- Current and long-term hiring trends in each of the bookkeeping, payroll, tax and CPA segments of the industry (all data seasonally adjusted)
- Average hourly wages for key segments
- Typical hours worked per week
- Trends concerning women in the accounting workforce
Nationally, the unemployment rate stands at 3.5 percent. For the past six months, the unemployment rate has been either 3.5 percent or 3.6 percent. Nationally, employment rose by 273,000 in February, and the number of unemployed persons at 5.8 million changed little. Professional and technical services increased by 32,000, and employment in financial activities increased by 26,000.
OVERALL TAX & ACCOUNTING EMPLOYMENT
The overall tax and accounting profession was growing at a 2.3 percent annualized date, according to the latest data available from February, repeating January's performance, but down from December's 2.8 percent rate.
A long-term view of earlier recessions shows the bursting of the dot-com bubble in 2001 resulted in 84,300 job losses, as the overall headcount in the tax and accounting profession fell from a peak of 884,800 in July 2001 to a low of 800,5000 exactly two years later. It would take another 34 months for headcounts to recover.
The financial crash of 2007-2008 resulted in the loss of more than 98,000 jobs and took almost eight years for a full recovery. In December 2007, the profession counted 967,500 employees, then dropped to 869,000 in October 2010, and finally recovered in March 2015 with 970,800 jobs.
In fact, the number of staffers has never fully recovered from the financial meltdown, after peaking at 767,800 in January 2008, dropping to 692,900 in December 2012, and edging back up to 777,7000 in July 2019, before slipping back down to 765,700 in the latest month available, pre-Coronavirus.
The new data show a total headcount in the profession of 1,035,600 employees in February, up 2,800 or 0.3 percent for the month, and up 23,000 or 2.3 percent for the year. They worked an average 36.3 hours per week, up 0.3 percent for the month and flat for the year. Their hourly earnings averaged $35.04, a new record by 3 cents, up 0.1 percent for the month, and $1.16, or 3.4 percent, for the year.
Staff numbered 765,700, down 11,700 or 1.5 percent for the month but up 6,200 or 0.8 percent for the year. They averaged 34.3 hours, up 18 minutes or 0.9 percent for the month but down 24 minutes or 1.2 percent for the year. They made $27.70 an hour, a new high and up 6 cents or 0.2 percent for the month and $1.26 or 4.8 percent for the year.
In the latest month, CPA firms set a new high-water mark in employment at 496,500, up 1,800 or 0.4 percent for the month and 14,500 or 3 percent for the year. Workers put in 37 hours per week, down 6 minutes or 0.3 percent for the month and 42 minutes or 1.9 percent for the year. They earned $36.94, a new record by a nickel or 0.1 percent for the month, 87 cents or 2.4 percent for the year.
Staff at CPA firms numbered 351,100, up 1,000 or 0.3 percent for the month and 300 or 0.1 percent for the year. They averaged 35.8 hours, up 6 minutes or 0.3 percent for the month but down half an hour or 1.4 percent for the year. Earnings hit a new high of $28.62, up 20 cents or 0.7 percent for the month and $1.33 or 4.9 percent for the year.
But in the long-term, the recessionary job cuts are stark.
After the dot-com crash, CPA firms started cutting headcounts in September 2001 (remember 9/11?) and didn't stop until June 2004. Following the financial crisis, CPA firms started shedding employees in January 2009 and kept cutting until June 2011. In both eras, female owners and partners felt the brunt of the down-sizings before male staffers.
Tax preparation services employed 87,500 for January, the latest month available, down 9,600 or 9.9 percent and 5,100 or 5.5 percent for the year. But the long-term view charts a generally downward trend since June 2011when employment peaked at 137,100. On the other hand, tax shops snapped back faster than other sectors of the tax and accounting profession.
Payroll services had 181,500 employees, a new record, up 1,200 or 0.7 percent for the month and 8,600 or 5 percent for the year. They hit 37 hours for the first time, up 24 minutes or 1.1 percent for the month and 1 hour 48 minutes or 5.1 percent for the year. They got new high earnings to match, making $33.35, up 43 cents or 1.3 percent for the month and $3.43 or 11.5 percent for the year.
In the latest month, staff in payroll numbered 150,700, up 1,000 or 0.7 percent for the month and 4,400 or 3 percent for the year. Their weekly hours hit a new high of 36.7, up 36 minutes or 1.7 percent for the month and 1 hour 42 minutes or 4.9 percent for the year. They made $28.31 an hour, down 8 cents or 0.3 percent for the month but up $1.54 or 5.8 percent for the year.
Payroll agencies started cutting staff before 9/11, with the first blow landing on 4,400 positions in May 2001. The bloodletting continued until 2006, just in time for the financial meltdown, which saw retrenchment for years, on and off, until 2017.
In the latest month, bookkeeping and other accounting services dipped slightly from the previous month’s record high to 267,300, down 600 or 0.2 percent for the month but up 9,500 or 3.7 percent for the year.
Longer-term, bookkeeping agencies after 9/11 started trimming in June 2002 and continued into 2005. The financial crisis hit bookkeepers in 2008 and continued until 2011. Since then, the sector has see-sawed between expansion and contraction, with the Coronavirus outbreak now positioned to reverse recent gains.
In the latest month, the number of women employees, who consistently make up about 60% of the profession's workforce, fell to 660,800, down 5,600 or 0.8 percent for the month but up 26,300 or 4.1 percent for the year. At CPA firms they numbered 306,600, down 500 or 0.2 percent for the month but up 9,400 or 3.2 percent for the year.
There were 92,300 women in payroll services, down 1,600 or 1.7 percent for the month but up 13,400 or 17 percent for the year.
In each of the century's prior recessions, women were the first to be fired, and also the first to be hired back, but often in lower-paid positions than men.
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