Coronavirus Impact on Small Businesses: 16 Experts Weigh In

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January 11, 2021 Topic: Economics Region: Americas Blog Brand: Coronavirus Tags: EconomyCOVID-19CoronavirusSmall BusinessesRecession

Coronavirus Impact on Small Businesses: 16 Experts Weigh In

Is there a road to recovery that defeats the virus and also revives the economy?

The nearly yearlong coronavirus pandemic has already taken hundreds of thousands of lives across the United States, and thousands more will likely fall victim in the coming months.

As incredibly tragic as this is, one shouldn’t forget that millions of Americans are suffering economically as well. There is no question that the virus’ impact has been far and wide—and to get a sense of its crippling effects, look no further than the hard-hit small-business community.

The coronavirus has already caused thousands of small businesses to shut across the country, some partially and others now permanently. According to Yelp’s Local Economic Impact Report, more than 163,000 businesses shuttered their doors during the pandemic—meaning roughly 800 establishments closed down each day.

Data from the University of California, Santa Cruz, revealed that the number could be even higher. According to its estimates, nearly 317,000 businesses shut down operations between February and September—about 1,500 closures per day.

During this past holiday shopping season amid the raging pandemic, a record number of consumers pivoted to purchasing their gifts on computers and smartphones—instead of physically entering malls and brick-and-mortar stores. Online spending on Black Friday surged nearly 22 percent to hit a new record, according to Adobe Analytics, while foot traffic in stores cratered 52.1 percent compared to the year prior, data from Sensormatic Solutions showed.

With coronavirus vaccine campaigns being ramped up in states all across the country, there is indeed hope within the small-business community that a critical turning point has been reached in the months-long fight against the virus. However, it still may be several more months before these establishments can realistically restart their full business operations.

Just within the past two weeks, the United States recorded its five deadliest days since the start of the pandemic. More than 4,000 people died from the virus on Thursday, marking the first time that daily figure was eclipsed. Already, nearly 20,000 have died in January alone, according to data compiled by Johns Hopkins University, likely setting the pace to become the most lethal month on record.

In order to shed more light on the plight of small businesses in the United States, the National Interest reached out to sixteen experts across the country to get their personal opinions. Here is what they had to say.

Mark Peterson, Professor of Public Policy, Political Science, and Law at the University of California, Los Angeles

“Had the COVID-19 pandemic been permitted to rage even more wildly than it has in response to whatever public health interventions were put into place, including lockdowns, businesses—especially small businesses—would have been devastated just by the effects of the disease on consumers and their behavior. Public authorities had to make decisions well informed by the science at the time, and then make appropriate adjustments as knowledge about the novel coronavirus became deeper and more nuanced. What has really been missing is the kind of large-scale and ongoing federal infusion funds to business owners that could have kept their businesses afloat and their employees more financially secure. This is a societal crisis in which everyone is harmed by the demise of businesses and the enormous fiscal capacities of the federal government, including borrowing, should have been marshaled in full force to amortize the burdens of the pandemic’s effects with its potentially multi-generational impacts.”

James W. Hughes, Professor and Dean Emeritus of Rutgers University’s Edward J. Bloustein School of Planning and Public Policy

“The call was a correct one (to shut businesses down), as it was an attempt to save lives by sacrificing livelihoods. In hindsight, with the benefit of eight months of analysis and experience, the closing of nonessential businesses could have been done more surgically. But at the time, it was the right decision. A successful vaccination effort will be necessary to establish widespread confidence to engage in face-to-face economic activities, such as indoor dining.”

Dr. Lee Riley, Professor and Chair of the Division of Infectious Disease and Vaccinology at the University of California, Berkeley

“It’s difficult to say if this was the right or wrong call, as we didn’t have a good grasp of how this coronavirus behaved during the early phase of the pandemic. Now that we know better, in retrospect, I think we didn’t give enough attention to how the stimulus funds should be allocated to support small businesses when they were shut down. As we heard, a lot of the stimulus package ended up in big businesses and banks that didn’t need support. It’s not enough to just shut down small businesses without providing support during the entire period of the shutdown. All small businesses and essential workers need to be financially supported during the entire period of shutdowns. The United States can easily afford to do this, and in the long run, such support will be cheaper than what would happen if these businesses permanently close and these essential workers end up getting COVID or unemployed, evicted, etc.”

Dr. Kumi Smith, Assistant Professor in the Division of Epidemiology and Community Health at the University of Minnesota

“I do not see the economy and public health as being in competition. Rather, we should be questioning why elected officials at the state and national levels are not doing more to ensure that those whose livelihoods depend on in-person interactions are not being better supported in order to safely weather any periods of shutdown needed to reduce transmission, hospitalization, and death.”

Dr. Dean Winslow, Infectious Disease Specialist at Stanford Health Care

“I personally feel so badly for businesses that have suffered—and many may sadly never reopen. The success of many countries in Asia, which had more complete shutdowns than we did in the United States, shows us that if we had done a coordinated nationwide effort—instead of the poorly executed and half-hearted effort we had—we would have had many fewer hospitalizations and deaths and these businesses would be back.”

Dr. Matthew Abeln, Physician at Allina Health

“I am not a business owner, and so I don’t have that perspective. My job is to protect and promote the health of my patients and society. So, yes, closing down bars and indoor restaurant dining was the right thing to do. I’m sure from a business owner’s perspective, the shutdown is enraging, or rather, the shutdown without adequate government help is enraging. In fact, I know this in talking to many of my patients who are business owners. Of course, it was the right thing to do in terms of protecting those business owners’ elderly parents and grandparents, and in some cases, the owners themselves—but it hurts them financially, and it puts them out of business. Restaurants and others are doing all sorts of creative things to bring in revenue, and I have been a huge supporter of restaurants financially throughout the pandemic, but it is not enough, and not every business can be creative in working around a pandemic. Unfortunately, if we had managed things properly, business owners wouldn’t be in this position by and large, and if we had proper social safety nets, the kinds of social safety nets seen in Western Europe, we would be doing much better.”

Dr. Daniel J. Van Durme, Chief Medical Officer of the Florida State University COVID Program and Senior Associate Dean for Clinical and Community Affairs

“I believe the issue of closing businesses and how quickly and thoroughly it was done will be debated for many years. We need to recognize that there are clearly health risks and harms from allowing people to gather and spread the virus. There are also economic, mental health, and other harms from closing businesses, and people losing jobs, not being able to feed their families, pay their rent, etc. In the long run, I am confident that customers will have confidence to return, and that collectively, we have the resilience to rebuild from the devastating economic, emotional, and health consequences of this pandemic.”

Dr. Glen P. Mays, Chair and Professor in the Department of Health Systems, Management and Policy in the Colorado School of Public Health at University of Colorado Anschutz

“The precipitous drop in certain face-to-face economic activities was an unavoidable consequence of this pandemic. Once consumers perceived and understood the risks in their local community, most responded rationally and moved to safer substitutes. Government policies restricting business activity tended to come a bit later, after many consumers were already reacting and reducing their risks. These policies were unfortunately necessary once community transmission reached high levels, as voluntary consumer behavior alone becomes insufficient to contain the spread. Of course, this consumer behavior and policy response played out in different parts of the country at different times, depending on regional patterns of virus transmission. Government policies regarding business closures, occupancy limits, and operating practices ideally should function as part of the strategy to rebuild consumer confidence. These policies signal to the public what activities are reasonably safe to resume, and under what circumstances. Consumers will return as the risks decline, as indicated by low levels of virus prevalence and spread within the community. Vaccination coverage will be a major boost to this confidence in 2021 once the general public has access to the vaccine.”