Small businesses, as we’ve written, face stiff challenges during the pandemic shutdown. Now a new paper published by the National Bureau of Economic Research and written by a stellar group of academic researchers and economists offers a glimpse of the pandemic’s effects on them. It’s 35 pages long and represents the first such deep dive we’ve seen.
In addition to its impact on public health, COVID-19 has had a major impact on the economy. To shed light on how COVID-19 is affecting small businesses – and on the likely impact of the recent stimulus bill, we conducted a survey of more than 5,800 small businesses. Several main themes emerge from the results. First, mass layoffs and closures have already occurred. In our sample, 43 percent of businesses are temporarily closed, and businesses have – on average – reduced their employee counts by 40 percent relative to January. Second, consistent with previous literature, we find that many small businesses are financially fragile. For example, the median business has more than $10,000 in monthly expenses and less than one month of cash on hand. Third, businesses have widely varying beliefs about the likely duration of COVID related disruptions. Fourth, the majority of businesses planned to seek funding through the CARES act. However, many anticipated problems with accessing the aid, such as bureaucratic hassles and difficulties establishing eligibility.
Recommended for those who want to dig deeper.
In Washington, interest in opening the economy continues to grow. The Spokesman-Review editorial board writes,
Millions of Americans have lost their jobs. Those newly unemployed are disproportionately low-income Americans who live paycheck-to-paycheck or from communities of color. The sooner they can return to work, the less devastating the effect on their lives. Suicide and domestic violence rates increase during hard times. Putting the economy on the path to recovery therefore is a humanitarian imperative, not something that can wait 12 to 18 months for a vaccine to become widely available…
Washington has done a good job rallying to stem the tide of the pandemic. Now Inslee should unveil solid rules for getting people back to work and a recovery that leads to a soft landing for hundreds of thousands of unemployed Washingtonians while providing protections for vulnerable victims.
And in the Everett Herald, Mike Sotelo, s president of the Hispanic Chamber of Commerce of King County and a board member for the Ethnic Chambers of Commerce Coalition, writes,
While state-defined essential businesses continue to stay open, the decision to keep other business closed that could re-open with reasonable safety guidelines, needs to be re-considered. This will be the biggest help to the small business in Washington. Many of these businesses are essential to the families, employees and communities they support…
There are several industries that, with social distancing and other precautions, will be able to create a safe work environment and prevent any resurgence of the virus.
The construction industry, retailers, restaurants and service industries can re-open with distance and occupancy guidelines. Many construction sites, for public contracts, are already open for business and employers and employees have demonstrated they can be responsible. The private construction industry can do the same.