Bruce Katz, Beth Bafford, Jamie Rubin, Michael Saadine and Colin Higgins · July 31
Five months into the COVID-19 crisis, the outlook for the country’s small businesses is as murky as ever. COVID-19 cases continue to rise across the country, slowing and halting many states’ reopening plans. Even if we were as far along in combatting the virus as we had expected to be in mid-July, small businesses’ path to recovery would be extraordinarily challenging.
The country’s small business problems existed long before COVID hit. America has not been forming new business or increasing economic dynamism at a sufficient rate since the Great Recession. The most recent set of SBA data revealed disturbing trends for Black-owned small business: their share of all employer firms underrepresents the size of the Black population, they are smaller and have lower revenues, and they are highly concentrated in a few sectors. These issues have only become more pronounced due to the coronavirus crisis.
Christopher Gergen, Nic Gunkel, Bruce Katz, and Victor Hwang · July 21
As Congress negotiates the next COVID-19 relief package, it is clear that the size and incentives surrounding unemployment benefits will be a major focus of contention between Republicans and Democrats in the Congress. We add another proposal to the mix: use unemployment insurance to encourage entrepreneurship as well as traditional employment. At present, in all but five states unemployment insurance only encourages employment pathways into traditional salaried jobs offered by existing companies, even though there are not enough jobs to go around. Fortunately, a solution already exists and is underway in those five states — Delaware, Mississippi, New Hampshire, New York, and Oregon. It’s time to expand it across the nation.
Bruce Katz, Aiyah Josiah-Faeduwor and Avery Harmon · July 16
Our recent analysis of the US Census Bureau’s 2018 Annual Business Survey revealed that there are 124,000 Black-owned employer firms in the US, representing only 2.2% of all employer businesses even though Blacks make up 14% of the US population. Black-owned employer businesses are smaller, with fewer employees, lower average revenues, and lower average payroll expenditures, than businesses overall. That’s partly because these firms concentrate in sectors of the economy that pay less and offer fewer opportunities for productive growth.
We are heartened by the new energy emerging across multiple sectors to rectify these longstanding disparities. On June 30th, for example, Netflix committed $100 million to reduce the racial wealth gap, jumpstarting the effort with a $25 million partnership with the Local Initiatives Support Corporation. The Netflix commitment, like other corporate efforts over the years, has focused on providing Black entrepreneurs and businesses with greater capital access. This is essential given the structural racism that has permeated the financial sector for generations.
Bruce Katz, Kevin Gillen, Ben Preis and Sharon Velasquez · June 26
My colleagues and I recently completed an analysis of the 2018 Annual Business Survey to identify the state of Black-owned business on the eve of COVID-19. To refresh: our topline finding showed that there are 124,000 Black-owned employer firms in the US, representing only 2.2 percent of all employer businesses. Black-owned employer businesses in the U.S. are smaller, with fewer employees, lower average revenues, and lower average payroll expenditures, than businesses overall. A key — but not sole — reason for this is because these firms concentrate in sectors of the economy that pay less and offer fewer opportunities for productive growth.
This week we drill down further to assess the varied performance of the states on this important topic. This assessment is timely given the important role that states have taken on during the COVID-19 crisis and the underlying powers and resources they have at their disposal.
Bruce Katz, Kevin Gillen, Ben Preis and Victoria Orozco · June 18
Since the beginning of the COVID-19 crisis, my colleagues and I have chronicled the impact of the economic shutdown on small businesses in general and on small businesses owned by people of color in particular. This research has taken on new significance in recent weeks with the civil unrest following the horrific death of George Floyd and the intensified focus on police brutality and entrenched racial disparities in income, health and wealth.
Bruce Katz, Andrew Petrisin and Luise Noring · May 28
Five weeks ago, we wrote about the shortcomings of the US response to the COVID-19 public health and small business crises and the need for a structural response, particularly the recommitment to, and rebuilding of, our institutions at the local, inter-local, federalist, and federal levels. Given the unprecedented fiscal impact of the crisis, we see the need for a respected federalist intermediary to address the third wave of this crisis—the oncoming state and local fiscal meltdown.
Bruce Katz, Michael Saadine and Colin Higgins · May 20
On April 8, the three of us — along with two close colleagues, Rick Jacobs and Jamie Rubin — published a piece entitled Needed: A Main Street Emergency Act. Our thesis was stark and straightforward. The COVID-19 crisis is wreaking havoc on small businesses across cities, suburban municipalities, and rural towns, particularly micro businesses that employ fewer than 20 employees and offer services vital for our communities. The local relief funds established by public, private and civic stakeholders, while fit to purpose, are already oversubscribed and undercapitalized. And the federal responses enacted as part of the CARES Act are already proving to be insufficient in scale, timing, product and distribution scope to address the needs of Main Street businesses.
Bruce Katz, Frances Kern Mennone, Michael Saadine and Colin Higgins · May 13
The COVID-19 crisis is wreaking havoc on Main Street small businesses across the United States. Millions of small businesses have shuttered for the duration of the crisis. The hardest hit are Main Street enterprises living on the brink — restaurants, bars, coffee shops, barbershops, hair salons, auto repair shops, dry cleaners and others that provide face-to-face services. These entities, usually sole proprietorships or businesses with fewer than 20 or even 5 employees are running out of cash or already broke. Micro businesses owned by people of color are most at risk, given decades of redlining and structural racism in the financial industry.
Bruce Katz, Mary Jean Ryan, Jessica A. Lee and Courtney Kishbaugh · May 7
The numbers are simply staggering. As of April 30, 30 million Americans had filed for unemployment since the onset of the COVID-19 crisis. As the United States slowly begins to re-open, the only certainty is that our uncertainty about how best to contain the contagion rules out any quick economic rebound. For the foreseeable future, our economy will stumble through a slow thaw and millions of people will be out of work. Now is the time to help these unemployed workers and young first-time college students acquire the skills they will need to thrive in our tech-powered economy.
Bruce Katz, Beth Bafford, Ross Baird, Michael Saadine, Colin Higgins · May 1
Resetting the Landscape
Weeks ago, as the extent of COVID-19’s effects on the economy were becoming a reality, we wrote that the sequencing and deployment of small business relief would be “messy and chaotic” rather than “linear”. Four weeks and one update of the CARES Act later, the situation remains as murky as ever: the spread of the virus is not yet under control, state responses are uncoordinated, and unemployment claims continue to climb.