Wednesday, September 2, 2020

Photo of the Day: The Battering of Small Business

Over the last decade or so, I’ve gotten used to small businesses posting closing notices in my hometown of Englewood, NJ. But this past week, the sight of three adjacent businesses with such signs was so stunning that it moved me to take this photograph.

What is happening in my community is being replicated on a wider scale across America now, as Congress flounders around deciding what to do, unable to figure out which components of the first round of massive aid rushed out this spring were most effective.

A front-page article in The New York Times today outlined the challenge being faced now: “The economic recovery that took hold in the spring is losing momentum. The fall will bring new challenges: Colder weather will curtail outdoor dining and other weather-dependent adaptations that helped businesses hang on in much of the country, and epidemiologists warn that the winter could bring a surge in coronavirus cases.”

Small businesses rightly fear what lies ahead. The Census Bureau reports that the share of small businesses who expect that it will take more than six months for business to return to normal has risen from about a third in late April to nearly half by the end of August. More frighteningly, about 5 percent now say they expect to close permanently in the next six months.

Democrats and Republicans diverge in how they view two of the principal programs to keep the economy afloat.

The Paycheck Protection Program (PPP) experienced some pains in being rolled out, with a House oversight committee reporting Tuesday that thousands of its loans for small businesses impacted by COVID-10 were awarded improperly to firms that already had received a PPP loan or were barred from doing business with the federal government, according to Ledyard King and Nicholas Wu's reporting in USA Today.

Bludgeoned for years by the GOP about the “waste, fraud and abuse” of their own social programs, the Democrats have not been shy in criticizing the same fault in the Trump-administered PPPs. Moreover, they would like to limit the number of employees of firm recipients to be no more than 100, while Republicans on Capitol Hill want the cap to go up to 300 employees.

On the other hand, Republicans object that the now-lapsed $600 weekly supplement to state unemployment benefits acted as a disincentive to work. But it is increasingly apparent that the supplement boosted consumption enough to keep many marginal businesses from falling into the abyss.

The price of inadequately supporting small businesses will shortly be experienced in a way that will make lawmakers rue their squabbling.

For years, small businesses have been the greatest generator of U.S. job growth. In fact, small businesses account for nearly half of jobs in the private sector. They have created additional benefits, too, as they have:

*allowed thousands of Americans to work independently, encouraging this nation’s longtime ideal of self-reliance;

*acted as a necessary counterweight to large corporations with major national influence but few roots in local communities;

*enhanced community identity and cohesion;

*fostered family life through local jobs close to home;

*pump tax revenues into the community;

*required less maintenance and infrastructure.

Say goodbye to all that now. All those handouts with tips for running such enterprises will make no difference in the current environment without government aid.

Keep in mind this statistic: Even with the combined effects of the PPP loans, the $1,200 stimulus checks, the $600 weekly unemployment supplements and many states hastily rolling back lockdown restrictions, unemployment was still 10.2% in July. Without a COVID-19 vaccine, when does the administration and Congress expect business conditions to return to normal? Until that happens, how do they expect small businesses--the lifeblood of American communities--to survive?

Congress should put aside posturing and polarization to compromise on another aid package that will continue to buoy consumers—and the small businesses that depend on their patronage—or bear responsibility for the resulting long-term damage to institutions whose loss will leave this nation commercially and emotionally poorer.

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