Most recent daily headlines center on large corporations, macroeconomic news, or government action. However, collectively small mom-and-pop businesses are a robust and influential piece, while not always the focus, of the US economy. These small businesses, 99.9% of all businesses in the US, collectively employ almost half of the nation’s private workforce.
Unfortunately, they’ve also been one of the hardest-hit sectors of the economy amid the pandemic, and California has not escaped its wrath. Eighteen months in, and California’s covid19 case numbers have only started to decrease after upending so many people’s lives.
The California business community has also experienced long-lasting effects due to Covid. Lockdowns, business closures, and remote employment have hurt the state’s economy, which could permanently change the socio-economic landscape of California for years to come.
Maxim Gorin, a California emergency medical service (EMS) entrepreneur, shares some of the adverse effects Covid has had on the business community and what the landscape could look like moving forward.
Direct Effects of Covid on the California Business Community
California’s economy took a severe hit from the beginning of state-mandated lockdowns in March 2020. Many “non-essential” businesses were closed entirely, while others operated under severe restrictions.
Most gyms and hotels were closed entirely or severely limited in their capacity. Restaurants were forced to transition to a takeout and delivery model while many retail stores adopted curbside pickup procedures to remain open with a limited staff. These drastic changes left many workers underemployed or entirely without work.
Covid’s Effect on Tourism
Recovery, job losses hit the leisure and hospitality industry in California far harder than other economic sectors. The coronavirus halted a record ten years of growth for California’s tourism economy in 2020, losing about $90 billion in visitor spending and 518,000 travel and hospitality jobs throughout the state. The travel and hospitality sector had accounted for one-third of the job losses in California.
Hundreds of thousands of Californians depend on the tourism economy. Fortunately, the travel & hospitality industry has historically been the fastest driver to lead the state back to economic recovery and put Californians back to work.
Many Businesses Permanently Closed
Many entrepreneurs lost their livelihoods as they were forced to close their businesses permanently. Almost a third of California’s restaurants closed their doors for good during the pandemic. Up to 1,000,000 people employed in the service industry lost their jobs.
Los Angeles County lost half a million jobs, while 7,500 small businesses permanently shut down as COVID-19 caused havoc in the region’s economy. In San Francisco, up to 50 percent of all small businesses remained closed through the summer of 2021. This is one of the highest rates in the nation and exhibits precisely how much damage Covid wreaked on the Bay Area economy.
Industries that depend on in-person customers and employ low-paid workers were hardest hit because they couldn’t pivot to a remote-work model. Many companies closed their offices during the pandemic and sent their employees home.
In addition, with schools closed and daycares shuttered, parents had no other options to care for children during the day. As lockdowns eased and businesses began to reopen, many Californian workers pushed to continue working remotely for the foreseeable future.
The most significant benefit of working from home is happier employees and higher productivity. Most employees are more content working from home as they avoid the stress of commuting and save on commute time. They achieve a better work-life balance. Happier employees with more time on hand are delivering higher productivity for businesses.
On the flipside, remote work negatively impacts businesses that rely on office worker foot traffic. When working from home, they do not need the typical services or visit the retail stores they usually patronize. Additionally, lunchtime excursions to eat out dramatically decreases restaurants’ already slim revenues due to the pandemic. Finally, commuters are using services less like buses, trains, and gas stations. This lack of consumer spending has had a domino effect within California communities, leading to n increase in layoffs, unemployment, and business.
There is no easy solution to remote work, but finding a business model that can balance the pro and cons of the system will allow for happy workers and successful businesses.
California’s Steps to Business Recovery
Gorin understands the impact that the pandemic has had on California’s economy. While the effects have been devastating on many levels, he encourages Californians to support small businesses by buying goods and services locally. Gorin also believes it’s essential for local government and corporations to develop programs that prioritize training that focuses on in-demand skills to help workers find jobs in growth industries. He says we should also prioritize providing child care and internet access through subsidies and regional infrastructure that could re-start or launch a new business.
This will help inject positive cash flow into the California economy, allowing communities and companies to thrive. Even in the face of a global pandemic, the perseverance of the innovative American spirit can spell better days for small business recovery.