Small businesses fear being ‘wiped out’ as coronavirus keeps doors closed
As the country shifts to reopen the economy amid the global pandemic, U.S. small businesses are most vulnerable to the economic pain caused by layoffs, furloughs and lost revenue.
More than half of small businesses expect to be out of business within six months, according to a survey of small business owners conducted by the Society for Human Resource Management. About 54% have laid off employees, while 22% have furloughed employees. Sixty-two percent of small businesses report a general decrease in revenue.
“SHRM has tracked COVID-19’s impact on work, workers, and the workplace for months,” says Johnny C. Taylor, SHRM president and CEO. “These might be the most alarming findings to date. Small business is truly the backbone of our economy. So, when half say they’re worried about being wiped out, let’s remember: We’re talking about roughly 14 million businesses.”
Small businesses in the service industry are the most likely to have closed as a result of coronavirus, according to SHRM, causing economic turmoil for employees. Nearly one-in-four U.S. workers are employed in the industries most likely to feel an immediate impact from the COVID-19 outbreak, according to a Pew Research Center analysis of government data. Among the most vulnerable are workers in retail trade (10% of all workers) and food services and drinking places (6%). The two industries combined employ almost 26 million workers.
While both the federal government and some state governments have pushed to reopen to provide relief for floundering business, 36% of those surveyed say the federal government isn’t doing enough to help. However, 49% say their state government is doing enough to support small businesses.
In March, Congress passed the Families First Coronavirus Relief Act, which requires certain employers to provide employees with paid sick leave or expanded family and medical leave for specified reasons related to COVID-19. But 47% of small businesses were unfamiliar with the benefits available to them, according to SHRM. While more than two-thirds have applied or intend to apply for a loan under the Paycheck Protection Program, which is a loan designed to provide a direct incentive for small businesses to keep their workers on the payroll, 21% are unfamiliar with the program.
“You can’t sugarcoat that reality,” Taylor says. “But this research can help us map it out and change it together because the findings include more than just how small business is hurting. It also provides business and policy decision-makers critical feedback from small businesses about state and federal support.”