SAN FRANCISCO – (INT) - Fifty-six percent of California small businesses experienced “large negative” effects from the pandemic, according to a recent Census survey—a survey that includes businesses with up to 500 employees. Sectors hit hardest by initial job loss face the most severe setbacks. As small businesses weather closures brought on by COVID-19, policy efforts to support them will be important for the state’s economic recovery.

Ninety-five percent of businesses are very small businesses with less than 50 employees, and these businesses employ one-third of California’s workers. Unemployed Californians will need workplaces to return to after the state recovers—small and very small businesses are a common place for workers to land, the Public Policy Institute of California reported.

In response to the pandemic, about three-quarters of small businesses in hard-hit sectors, such as food service and entertainment, have had to take dramatic measures. That is, today business owners in these sectors are much more likely to have laid off employees, decreased employee hours, or suffered revenue losses since mid-April, compared to other sectors.

Compounding these struggles, many small businesses have already missed scheduled payments such as rent, utilities, or payroll. The impact has been particularly stark in accommodation and food services, where nearly two-thirds of business owners have missed payments since March 13.

Very small businesses are more likely to be owned by women and nonwhite Californians than larger businesses. Latinos own 11% of these businesses but only 2% of larger businesses. Similarly, Asians own 23% of very small businesses versus roughly 10% of larger businesses. In California, women run 22% of such businesses, compared to 7% of larger businesses.

Within the industries hit hardest by COVID-19, very small businesses with less than 50 employees have even higher rates of Asian, Latino, and women ownership. In particular, one-third in this heavily affected sector—for example, restaurants and retail—are Asian-owned. Women also own 26% of very small businesses in these industries; another 20% are jointly owned by men and women.

Story Date: June 4, 2020