It’s been sad to see Congressional Republicans putting large firms at the top of their pandemic stimulus bills. Of all the people and organizations suffering, they probably need help the least, given extra-low interest rates, ample assets usable as loan collateral, and if all else fails great legal latitude in ridding themselves of debt while continuing operations. Smaller enterprises are much more vulnerable, and employ most Americans, so need at least equal consideration anyway – what has been happening with them?
Many don’t exist anymore, as per Frank Miles’s November 29th Fox Business “Nearly one-third of NY, NJ small businesses reportedly closed in 2020,” which, per the subtitle and first sentence, only includes Covid-19-caused permanent shutterings. He reported the national average as 29.8%.
As for crisis payments, “More than half of emergency small-business funds went to larger businesses, new data show” (Washington Post Business Alert, December 1st), with “5 percent of the recipients” getting “more than half of the money from the Treasury Department’s loans for small businesses,” as “about 600 mostly larger companies, including dozens of national chains” got the Paycheck Protection Program’s $10 million maximum. Alfredo Ortiz recommended extending that plan in the December 4th Fox Business “It’s Defcon 5 for America’s small businesses, this is what has to happen next.” His statement that ”experts assume that the country will achieve vaccine-induced herd immunity by May,” on which he based the need to renew that program for only “a few more months,” is haywire, and he did not address where its money is going now, but even if it turns out to be for all of 2021 it would be worthwhile.
I don’t think, though, that we need to take the suggestion, “Let’s Talk About Higher Wages,” proposed by the New York Times Editorial Board on November 28th. Valid points here are that people spending money instead of mainly hoarding it is good for the economy, and that tax cuts would not now be “a simple formula for economic growth,” but a time with many local businesses barely surviving is not one to force across-the-board pay increases. The board called the stimulus effect of reducing taxes “tired,” but the other ideas they offer to support the vague notion of raising pay deserved that adjective more.
James Langford, in the November 27th Fox Business, forecast that “US economy sprints toward normal in 2021 but with coronavirus scars.” In the piece, Bank of America’s head U.S. economist Michelle Meyer expected that “the country will welcome back experiences once it is safe, but we do anticipate there will be some scarring,” with the worst of the pandemic soon to follow and gross domestic product possibly now decreasing. Indeed, there are three reasons why we won’t see March 2020 economic levels for a long time: people’s reservations about spending money on many things even after the main danger is gone, what might be more than one-third of Americans refusing any vaccine, and yet-unknown changes in habits possibly reducing out-of-home activity. Although we can project with confidence that most United States residents will be vaccinated in time for normal family holiday gatherings next year, we simply don’t know much more. These developments would mean more small business failures in the next several months, but a solid chance of better times after that.
Except for the also nearly indisputable proposition that Joe Biden’s election will reduce Covid-19 cases, hospitalizations, and deaths, what might come from him and his Treasury Secretary nominee Janet Yellen? Unfortunately, Giovanni Russonello’s November 17th New York Times “Biden’s Economic Plan for the Virus” didn’t offer much beyond that after the president-elect met with them, “C.E.O.’s and the union bosses had had agreed that the government must act boldly to bring the economy back up to speed.” Since then, Biden has encouraged people to wear masks and practice social distancing but has not proposed any legal requirements, a stance good for small ventures which can set safety standards as they see fit.
In the November 29th Business Insider, Ben Winck’s “Here’s how the US economy could transform under Biden after his appointment of Janet Yellen as Treasury Secretary – starting with sizable stimulus,” offered what might be called educated speculation. He projected a “multitrillion-dollar” 2021 relief package, better cooperation between governmental financial entities as Yellen, “if confirmed, will be the first person to have run the Treasury, the Fed, and the White House Council of Economic Advisors,” offers more “focus” on her specialty of understanding employment and the labor market, and has shown an attitude of “recovering first and dealing with government debt later.” She is also likely to keep interest rates low, her bias in the past and especially well justified now. All of these are favorable for local enterprises.
So how should small business owners view the future? The ideas in the last three articles are remarkably consistent, pointing toward survival followed by real opportunity. We have consistently heard from those working with the pandemic that people need to maximize their chances of arriving alive to the post-coronavirus world. That goes for small businesses as well – it’s what we and our enterprises both need to do.