Stunning Small Business Closure Numbers Reveal Just How Devastating Another Lockdown Would Be
Over a quarter of the small businesses in New York and New Jersey have closed since January, according to grim numbers from a Harvard-run database tracking the economic damage wrought by COVID-19 lockdowns. Yet, the governors of both states are looking toward further lockdowns — something that could cripple the economy going forward.
TrackTheRecovery.org pegged New York’s small business loss rate as of Nov. 16 at 27.8 percent, according to the New York Post. In New Jersey, the numbers were even grimmer: 31.2 percent.
At least New York comes in under the national average of 28.9 percent of small businesses having closed since the pandemic hit. Some large states are in the same boat as New Jersey or worse. Texas is at 32.5 percent closed and California, which recently put the brakes on economic activity, is at 31.1 percent.
Eileen Kean, the New Jersey director of the National Federation of Independent Businesses, told NJ.com that things are “really bad” in the Garden State.
“And without federal dollars coming into New Jersey, the Main Street stores and other establishments are not gonna make it through the winter,” she said.
Over 50 percent of small businesses were closed in New York and New Jersey at the height of the pandemic, with 52.5 of New York businesses and 53.9 percent of New Jersey businesses having shuttered this spring.
In the past few days, the governors of both states have been eyeing a return to lockdowns that would closely resemble what we saw during COVID-19’s darkest hour.
New York Democrat Gov. Andrew Cuomo said Monday that he would press a “pause” button for an area if hospitals face capacity issues, according to The New York Times. That pause, while undefined, would look like a return to roughly the same strictures the state had in the spring, although more locally confined.
“We are not going to live through the nightmare of overwhelmed hospitals again,” Cuomo said.
The New York governor’s “micro-cluster initiative,” which has sought to fight the virus by limiting economic activity in specific areas or neighborhoods with a high infection rate, has already faced criticism from small business owners.
In November, the owner of a pottery shop in a Jewish Brooklyn neighborhood that was locked down under micro-cluster restrictions went viral after she recorded city authorities writing her a summons for packing craft kits inside her business.
Last night, as thousands of New Yorkers partied in the streets, sheriffs entered this pottery shop, owned by a single mom of five.
With no income coming into her “red zone” business, the owner was harassed while preparing craft kits to sell for the upcoming holiday. pic.twitter.com/mgjuGK0YEM
— Councilman Deutsch (@ChaimDeutsch) November 8, 2020
The governor said that new metrics to determine lockdown measures would be coming later this week, but he hinted they weren’t going to be pretty.
“I don’t believe we’ve seen the hit from Thanksgiving,” Cuomo said, adding the caseload from that “will be dramatic.”
It may be, but locking down businesses isn’t the best strategy to deal with this — as Cuomo himself intimated on Twitter.
Hospitalizations are climbing — statewide.
What can you do?
Cut out the small gatherings. Now.
65% of all cases are traced to small gatherings.
Gov’t can’t enforce who’s in your living room. But you can.
— Andrew Cuomo (@NYGovCuomo) November 30, 2020
There’s no epidemiological consensus on the evidence for the virus’ spread, but never mind. Here’s what Cuomo is saying: He set strict rules for small gatherings at Thanksgiving, which he apparently admits people didn’t follow. He believes this to be the genesis of the virus. So he’s going to … close businesses across the state to deal with a problem he believes to be fueled by small gatherings and instead drive us into our homes where we’d be more likely to have small gatherings.
There are flaws in this strategy.
New Jersey Democrat Gov. Phil Murphy has been less forthcoming about what his plans were as the infection rate rises in his state, saying it’s his last option in one breath while seeming to indicate he would be amenable to a lockdown in another.
According to the New York Post, he made clear it was indeed an option during a television appearance Sunday.
“I’m not sure I’d say possible, Bret, but I think it has to stay on the table,” Murphy told Fox News’ Bret Baier. “You hate like heck to even have to consider that, and God willing we won’t have to.”
Murphy added that “there’s a lot of fatigue out there.”
“There’s a lot of private transmissions. The weather is cold so folks are doing what they were doing three months ago outside, they’re doing it inside. And that cocktail, when you add to that the holiday season, we’re in for a rough ride here.”
That doesn’t quite sound like a governor who believes lockdowns are his last option. Thus, Murphy told reporters Monday he wasn’t going to shut down indoor dining or retail without a federal aid package, according to NJ.com, blaming the Senate majority leader for the fact he couldn’t yet do what’s absolutely his final option, he swears.
“As long as Mitch McConnell is sitting on his hands and not getting behind a major stimulus … [if] you shut without absolute evidence that there’s spread and transmission, you shut nonessential workplaces or indoor dining, you’re basically putting a bullet in them,” Murphy said.
“And unless we see explicit transmission coming out of there, that’s blood on our hands in a different respect,” he added. “And it’s shameful that they have not acted in Congress — especially McConnell and the Republican Senate — to throw a lifeline to small businesses.”
So totally last option, and how dare Mitch McConnell not give him what he wants so he can do what he absolutely, positively doesn’t want to do?
There was similar talk out of Murphy on Friday.
“Listen: Could you see it differently if … you had more latitude to say, ‘We can afford to take a two-week pause there because they’re getting cash on the barrel in order to do that’?” the governor told reporters. “That’s the trade. That trade should be available.”
Leaving aside the fact Murphy doesn’t seem to apportion any blame to Speaker Nancy Pelosi or the House Democrats — who’ve insisted their bloated, bailout-heavy HEROES Act ought to be the starting point of any relief bill discussions — the insinuation that federal spending will be some kind of deus ex machina that allows states to impose a second wave of lockdowns without losing more small businesses runs counter to the data we’ve just looked at. These losses occurred with federal assistance, after all, proof that government spending is no replacement for economic activity.
And keep in mind, these lockdowns disproportionately hurt low-income workers.
According to TrackTheRecovery.org, while those who earn over $60,000 have actually seen their 2020 incomes go up slightly as of Sept. 30, those who make under $27,000 have seen their incomes drop an average of 19.2 percent since the beginning of the year.
While spring-style lockdowns seem a bit less likely in New Jersey than in New York, where Cuomo’s words seem to indicate a “pause” is pretty much a fait accompli, that’s not to say New Jerseyans aren’t tiring of the lockdowns as they’re presently constituted.
On Sunday, pro-Trump protesters picketed outside the governor’s home, although police wouldn’t allow them onto Murphy’s street.
At least 12 cop cars, including k9, just on this side of the road pic.twitter.com/gK13IOoVOF
— Ben OSullivan (@MargerineMagpie) November 28, 2020
Neither New Jersey nor New York is the worst state in the nation for small business closures, and at least New York comes in at slightly better than the national average. However, another round of hitting the brakes hard would be brutal to businesses still holding on. There are only so many hits restaurants and mom-and-pop stores can take.
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