Storefront in South Haven, Michigan. Photo Credit: Kevin Dooley, CC BY 2.0
My latest piece is online at City Journal and is about the impact of coronavirus on small businesses and efforts to try to help them. Here’s an excerpt:
Shutdowns mandated by the coronavirus are a pending apocalypse for small businesses, which employ 48 percent of American workers. The average small business has only 27 days’ worth of operating costs in cash reserves, with many holding far less than that. Businesses that either can’t reopen or are suffering a big drop in revenue will soon be insolvent. Some have already announced that they will be shutting down.
Keeping small businesses alive post-pandemic will require a massive injection of cash that only the federal government can provide. But a federal response will be neither fast enough nor big enough to help all the businesses that need it, in time to save them. Washington’s effort must be supplemented by local responses. Thankfully, these are already under way.
Click over to read the whole thing.
Some cities and states will likely do a much better job of supporting small businesses than others. Just as some states have responded much more successfully to the pandemic than others, some places may come up with more successful ways of helping small businesses than others.
Aaron, I have a broader question – do you think that the impact of all of this will change the trajectory of any cities? Yes, all cities are going to be different on the other side of this, but will any city that has struggled maybe grow – or vice versa?
I am not Mr. Renn, but I do have some preliminary thoughts about this question.
First, hopefully the Federal government will dramatically increase its spending on biomedical research related to viruses in response to this pandemic. I don’t know what metros have that expertise already (besides probably DC, Atlanta, and maybe San Diego).
Second, will there be a change in global patterns of trade? Covid-19 has only made relations between the US and China worse, and nationalist governments all over the world will see the pandemic as an opportunity to further restrict immigration and cross border trade. So potentially metros particularly dependent on trade and immigration will suffer, and those with less exposure will do relatively well.
The pharmaceutical industry in the US is pretty diffuse. Same for biomedical research at big research universities and hospitals. So if the Feds pour a ton of money into virology, it will go where medical research money already flows.
https://www.brookings.edu/blog/the-avenue/2020/03/31/when-will-your-city-feel-the-fiscal-impact-of-covid-19/?utm_source=newsletter&utm_medium=email&utm_campaign=newsletter_axiosam&stream=top
This suggests that some cities will face lasting pressure for local reform while others will not and will be able to hold off such reform.