Question

Write a paper on the effects of coronavirus in the US on small businesses (white and black), large businesses (white and black). Which businesses (small and large) performed worse than the other. In terms of welfare and distribution of income and employment, who gets hurts more: Blacks or whites, Male or female, also Who will get more government assistant?

Answer 1

Whether by necessity or ingenuity, minority-owned small businesses may be giving us an early sign of how US businesses will adapt in the wake of COVID-19. These businesses are experimenting with new ways of working to ensure their employees’ safety, offering monetary relief to employees and community members, and introducing new services such as free delivery to those who need it.

According to the recent poll of more than 1,000 small businesses nationwide, more than 40 percent of minority-owned small businesses have added new services to support their communities and employees, compared with 27 percent of all respondents. A majority of minority entrepreneurs are optimistic about economic recovery in general: 56 percent of minority small-business owners reported that they were optimistic about post-COVID-19 economic conditions, compared with 49 percent of all respondents.

Yet minority entrepreneurs, facing myriad challenges, are also concerned about risks to their own businesses. Of all vulnerable small businesses, minority-owned ones may be most at risk. Many were in financially precarious positions even before COVID-19 lockdowns, and minority-owned small businesses often are in industries more susceptible to disruption. Ensuring that these businesses survive in the current circumstances will require fundamental shifts in how private-, public-, and social-sector organizations come together to support them.

The COVID-19 crisis is affecting small businesses across the board. The 1.1 million minority-owned small businesses with employees in America are an essential job source, employing more than 8.7 million workers and annually generating more than $1 trillion in economic output. Women own nearly 300,000 of them, employing 2.4 million workers.

The crisis could disproportionately affect minority-owned small businesses for two critical reasons: they tend to face underlying issues that make it harder to run and scale successfully, and they are more likely to be concentrated in the industries most immediately affected by the pandemic.

Minority-owned small businesses face structural challenges that underscore the underlying economic fragility of underrepresented groups, including the black and Latinx communities.

These underlying challenges could directly affect the health of minority-owned small businesses. In an assessment of the financial health of companies, the Federal Reserve Banks reported that minority-owned small businesses were significantly more likely to show signs of limited financial health—by factors such as profitability, credit scores, and propensity to use retained earnings as a primary funding source. These companies were approximately twice as likely to be classified as “at risk” or “distressed” than nonminority-owned small businesses. That’s particularly concerning, since the US Federal Reserve also indicates that distressed companies are three times as likely as healthy businesses to close because of a two-month revenue shock.

Black-owned businesses, overall, also tend to start out with far less capital, whether from investments or bank loans, than white-owned businesses do. And only 1 percent of black business owners get a bank loan in their first year of business, compared with 7 percent of white business owners. Twice as many white business owners—30 percent of the total—use business credit cards during their first year compared with 15 percent of black business owners. The COVID-19 crisis is likely to compound this issue: 42 percent of minority-owned small businesses responding to McKinsey’s US Small Business Pulse Survey reported that obtaining credit was becoming increasingly difficult, compared with 29 percent of all respondents.

As an additional consideration, research suggests that the average minority-owned mature small business is 30 percent smaller than the average nonminority-owned mature small business. Our own analysis of the data provided by Minority Business Development Agency found that only 11 percent of minority-owned small businesses had employees, compared with 22 percent of nonminority-owned small businesses. And, when looking exclusively at small businesses that have employees—excluding sole proprietorships—we found that, on average, minority-owned small businesses had 32 percent fewer employees and 47 percent lower receipts than nonminority-owned ones did.

African American households have struggled more economically than the median household nationwide, even when unemployment was at single-digit historic lows. Now, months into the novel coronavirus pandemic that has rendered 40 million people jobless, African Americans have lost jobs at higher rates in many communities.

A recent Washington Post-Ipsos poll found that blacks reported being furloughed and laid off at higher rates than whites, underlining the disproportionate toll of the pandemic on African American communities. And this is all happening at a time when black Americans are also dying of covid-19, the disease caused by the virus, at much higher rates than whites, according to the Centers for Disease Control and Prevention.

Black people are more likely to work in industries, like hospitality, dining and leisure, that have been so severely curtailed by the virus. And those who have kept their jobs are more likely to work in hands-on, front-line work that puts them at continual risk of exposure in grocery stores, public transportation, trucking, warehousing and health care.

Additionally, black workers with résumés equivalent to white workers are paid less, given worse benefits and are more likely to be underemployed compared to white counterparts, Perry noted.

Nationwide, blacks have enjoyed a more uneven recovery from the last great economic jolt, the Great Recession, compared to white populations. In terms of household net worth — the median for white households of $171,000 is about 10 times greater than black households’ $17,150 in recent years.

The disparities are clear in the places that erupted in riots over the weekend. In New York, where looters laid waste to one of the world’s most storied commercial districts, only 32 percent of black residents own homes — less than half the percentage for white residents.

Small businesses have performed much worse than the others.

Shipments that usually arrived by then were coming in later than usual. Recently, it has gotten worse. Representatives from brands she sells in the store have explained that the coronavirus outbreak, also known as COVID-19, in China have halted production of clothing. Factories were shut down without an opening date, and travel restrictions prevented brands from visiting the factories. Workers who traveled during Lunar New Year have been unable to return to work.

Large companies and retailers like Apple and Nike have made headlines during the coronavirus outbreak, as investors anxiously await news on whether the virus will impact the companies’ abilities to make sales.

But because of the many impacts of the virus, small business owners are struggling, too. Although official reports showing the impact on small businesses have yet to be released, news reports across the country illustrate the struggles.

Even those who are not being affected by Chinese suppliers still feel the impact: a fear of crowded spaces and a distrust of products and people of Asian descent are taking a toll on Chinatowns across the United States.

Bo Ky, a pho restaurant located in New York City’s Chinatown, used to welcome an average of 120 customers daily, but since the coronavirus outbreak, the number of visitors dwindled down to 30 to 40.

Chivy Ngo, general manager of Bo Ky, claims the restaurant has lost about 60% of revenue and cannot produce all the items on the menu due to a lack of staff on site. Now that New York has confirmed cases of coronavirus, “of course it makes people more concerned about going out,” said Ngo.

Wellington Chen, executive director of Chinatown Partnership, a nonprofit that works to preserve and promote Chinatown, said the effect the coronavirus has had on business is far greater than any damage caused by SARS.

“The idea of social distancing is really taking hold,” said Chen. He claims some shops have lost about 40% of revenue, while others have lost up to 70%. The situation for business owners is Chinatown is so dire that some are unable to pay rent this month, according to a property manager that spoke with Chen.

In response to the desperate situation, New York Congresswomen Grace Meng and Nydia Velázquez, and Rep. Judy Chu from California introduced a bill this week to help small business owners across the country suffering economic damage due to the coronavirus. The bill, called “Small Business Relief from Communicable Disease Induced Economic Hardship Act,” would allow owners to access Economic Injury Disaster Loans of up to $2 million to cover business expenses.

“Many of our Asian-owned businesses in New York have already experienced a decline in sales due to misinformation, fear and stigma associated with the virus,” said Velázquez, whose congressional district in New York City includes Chinatown, in a press release.

But for Chen, the real cure for business owners relies on the public. “We really need the public support,” said Chen, “and we need the public to step up and resume life.”

No official guidelines have been released for small businesses on how to protect themselves from the virus, but the Centers for Disease Control and Prevention has come forward to explain that “being Chinese or Asian-American does not increase the chance of getting or spreading COVID-19.”

The CDC has also recommended encouraging sick employees to stay home, and for all employees to practice good hygiene including washing hands with soap and water for at least 20 seconds.

In terms of welfare and distribution of income and employment Blacks are hurt more and mostly females are included. Residential segregation between black and white Americans remains both strikingly high and deeply troubling. Black–white residential segregation is a major source of unequal opportunity for African Americans: among other things, it perpetuates an enormous wealth gap and excludes black students from many high-performing schools. While some see residential segregation as “natural”—an outgrowth of the belief that birds of a feather flock together—black–white segregation in America is mostly a result of deliberate public policies that were designed to subjugate black people and promote white supremacy. Residential segregation matters immensely, because where people live affects so much of their lives, such as their access to transportation, education, employment opportunities, and good health care. In the case of black–white segregation in particular, the separateness of African-American families and white families has contributed significantly to two entrenched inequalities that are especially glaring: the enormous wealth gap between these races, and their grossly unequal access to strong public educational opportunities. It is well established that historical and contemporary racial discrimination has given rise to a substantial income gap between black and white Americans. African Americans make, on average, about 60 percent of what whites make.

Government assistant should be more on Black people and also on inequality of income and less employment opportunites based on gender. All the measures should be taken to remove these problems from the society like poverty, unemployment etc.. Income transfers to vulnerable groups have become the norm in middle-income countries, especially through the spread of family and old-age transfers. However, income transfers to families and children are rare in the region, with the exception of Mongolia’s Child Money Programme. School stipends do exist, but they ignore early childhood and are not always focused on children living in poverty.Income transfers to families in extreme poverty are even less common, except in Central Asia.24 Timelimited income transfers have been successfully employed in Indonesia to mitigate the adverse effects associated with the withdrawal of energy subsidies.Employment guarantee programs, of which India’s Mahatma Gandhi National Rural Employment Guarantee is the largest example, secure a minimum income for disadvantaged families conditional on the supply of labor by adult members.29 Their design relies on selfselection by program participants. Entitlements are backed by legislation, and costs are included in the budgetary cycle. This is in contrast to public works, where entitlements are short-term and discretionary. Public works are more appropriately defined as emergency assistance.Poverty reduction effectiveness can be improved by information on program implementation and outcomes. Technological change, and especially the digital revolution, can offer significant improvements in the implementation and monitoring of these programs. Monitoring provides real-time information, which is essential to fine-tune implementation. Moreover, the evaluation of outcomes contributes information to support policy decision making and accountability. Quasi-experimental impact evaluations of social assistance programs are helping generate a knowledge base, but developing a deep analysis of context is important to help generalize the findings from impact evaluations. The Social Protection Indicator is a good first step in developing a regional knowledge base.