Evidence and Ideas for Change Supporting small businesses and their workers
Sarah Rosen Wartell
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Twice a week, my family is getting take-out from our favorite neighborhood restaurants. The parking lot is almost empty, of course. And we see fewer staff bringing our food to the curb. Our neighborhood eateries serve many families who still have disposable income. Others are less lucky. Countless small businesses across the country are at risk of losing everything, struggling to stay “open” so as to pay rent and provide some income for their reduced staff.

Our country’s waiters, cooks, bartenders, and dishwashers are among the most economically vulnerable workers in America, with low earnings and little, if any, emergency savings, and nearly a quarter lack health insurance. They represent 5.7 percent of the private-sector workforce older than 18, and, in high-tourism states like Nevada and Hawaii, they make up more than 10 percent, according to a new Urban Institute brief. Now, in the midst of the pandemic, many food service workers, including those at fast-food chains, are considered part of the essential workforce—just like our doctors and nurses on the frontlines.

For many, they’re not just working their way through school and picking up occasional shifts; this is their livelihood. Their industry has lost more than three million jobs since March 1, according to the National Restaurant Association. So where we can do our part—safely— we should continue to support workers and their establishments during what promises to be a long haul.

Their employers, many small businesses, are not doing much better. I’m grateful Congress provided relief to small businesses and their workers through the Coronavirus Aid, Relief, and Economic Security Act (PDF), including $350 billion in loans to cover payroll costs—loans that will be forgiven if the borrower continues to employ their workers or rehires them when they reopen for business. But I fear we will need to get comfortable with much more robust public-sector help for small- and midsize businesses—such as immediate, emergency cash assistance—if we want them to survive this crisis.

In a normal time, loans are often insufficient to help small businesses grow and scale; many businesses are not credit ready, don’t have a business plan, and so on. In this crisis, procedural hurdles are the enemy. I hope our government will prove nimble in administering the new programs. And, when it is time to reopen and help small businesses rebuild, there will be a great need for technical assistance and grants to get firms going again.

When the country reopens for business, Chicago’s Neighborhood Opportunity Fund is a promising concept that could be scaled. They provide cash grants in combination with loan capital to lower debt levels for small businesses and reduce risk for lenders.

Are you thinking about solutions for small businesses and their employees during this unprecedented time? My colleague Brett Theodos and I would be interested in hearing your ideas.

I hope you are healthy. Please stay safe.

Research Areas Workforce
Tags Small businesses Community and economic development