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| We All Need Small Businesses. Don’t Let Them Die. | We All Need Small Businesses. Don’t Let Them Die. |
| (about 1 hour later) | |
| [Read our Coronavirus Relief Small Business F.A.Q.] | [Read our Coronavirus Relief Small Business F.A.Q.] |
| By the time the coronavirus crisis is over, we might emerge from our homes only to find some of our favorite shops, gyms and restaurants permanently shuttered. | By the time the coronavirus crisis is over, we might emerge from our homes only to find some of our favorite shops, gyms and restaurants permanently shuttered. |
| It doesn’t need to be that way. While some of the harm has already been done, we can still prevent much of the long-lasting damage. | It doesn’t need to be that way. While some of the harm has already been done, we can still prevent much of the long-lasting damage. |
| Consider a hypothetical neighborhood restaurant that, until this crisis, was flourishing. Business was brisk, the employees worked well together, and customers enjoyed the feeling of being “regulars” at a place where everyone knew their name. | Consider a hypothetical neighborhood restaurant that, until this crisis, was flourishing. Business was brisk, the employees worked well together, and customers enjoyed the feeling of being “regulars” at a place where everyone knew their name. |
| Then the coronavirus hit. Suddenly business dried up. At first there was some takeout revenue, but even that disappeared. | Then the coronavirus hit. Suddenly business dried up. At first there was some takeout revenue, but even that disappeared. |
| The bills keep coming. The restaurant owner no longer needs to buy meats, vegetables or liquor, but she is still on the hook for her biggest cost — rent. And she faces an ethical dilemma: Does she use her scant savings to continue to pay her workers? | The bills keep coming. The restaurant owner no longer needs to buy meats, vegetables or liquor, but she is still on the hook for her biggest cost — rent. And she faces an ethical dilemma: Does she use her scant savings to continue to pay her workers? |
| She has little money in cash reserve; operating margins are thin in a restaurant, and her savings had already been spent on expanding the cramped kitchen. What was a thriving enterprise before the pandemic will emerge — if it emerges at all — as a hobbled business, which may well fail shortly thereafter. | She has little money in cash reserve; operating margins are thin in a restaurant, and her savings had already been spent on expanding the cramped kitchen. What was a thriving enterprise before the pandemic will emerge — if it emerges at all — as a hobbled business, which may well fail shortly thereafter. |
| The example may be hypothetical, but for hundreds of thousands of restaurants around the country the story is all too real. As Ben Leventhal, the chief executive of Resy, an online restaurant reservation platform, said, “We’re in uncharted territory,” and restaurants are struggling to survive. | The example may be hypothetical, but for hundreds of thousands of restaurants around the country the story is all too real. As Ben Leventhal, the chief executive of Resy, an online restaurant reservation platform, said, “We’re in uncharted territory,” and restaurants are struggling to survive. |
| But there are tools that can be used to create better outcomes. | But there are tools that can be used to create better outcomes. |
| The government can unilaterally freeze commercial rent and mortgage payments for small businesses. The policy can be targeted to businesses that use less than a certain square footage. | The government can unilaterally freeze commercial rent and mortgage payments for small businesses. The policy can be targeted to businesses that use less than a certain square footage. |
| This would shift the loss to the owners of those properties and mortgages, but many of them are large diversified companies with a balance sheet to absorb losses and the ability to renegotiate their contracts with their investors. Of course, some owners are themselves individuals or small businesses; for them, the waiving of their own mortgage payments would serve as relief. | This would shift the loss to the owners of those properties and mortgages, but many of them are large diversified companies with a balance sheet to absorb losses and the ability to renegotiate their contracts with their investors. Of course, some owners are themselves individuals or small businesses; for them, the waiving of their own mortgage payments would serve as relief. |
| During the 2008 crisis, the government understood this principle well. It bailed out large financial firms for much the same reason: They were facing temporary shocks that, without intervention, would unnecessarily become permanent ones. Whatever else one may feel about those bailouts, that economic logic was sound. Those investments yielded healthy profits for the government. | During the 2008 crisis, the government understood this principle well. It bailed out large financial firms for much the same reason: They were facing temporary shocks that, without intervention, would unnecessarily become permanent ones. Whatever else one may feel about those bailouts, that economic logic was sound. Those investments yielded healthy profits for the government. |
| If it made sense to help American International Group then, surely it makes more sense for the local pizza shop. Beyond freezing rents and mortgage payments, the government can infuse cash into these businesses. That need not be a transfer — it can be an investment. While government agencies cannot easily take equity in small businesses, they can give credit. It makes sense to offer zero-interest loans with long maturities for the sole purpose of paying the staff. | If it made sense to help American International Group then, surely it makes more sense for the local pizza shop. Beyond freezing rents and mortgage payments, the government can infuse cash into these businesses. That need not be a transfer — it can be an investment. While government agencies cannot easily take equity in small businesses, they can give credit. It makes sense to offer zero-interest loans with long maturities for the sole purpose of paying the staff. |
| Governments around the world are beginning to act. | Governments around the world are beginning to act. |
| President Emmanuel Macron has proposed suspending business rent payments in France. Proposals in Washington include loans to help cover lost revenue. As of this writing, a national rent moratorium has not been declared, but some policymakers recognize the need to do something for small businesses. Senator Marco Rubio, a Florida Republican, said on Wednesday, “There is broad general agreement that small businesses in this country will not be able to survive unless there is extraordinary assistance.” | President Emmanuel Macron has proposed suspending business rent payments in France. Proposals in Washington include loans to help cover lost revenue. As of this writing, a national rent moratorium has not been declared, but some policymakers recognize the need to do something for small businesses. Senator Marco Rubio, a Florida Republican, said on Wednesday, “There is broad general agreement that small businesses in this country will not be able to survive unless there is extraordinary assistance.” |
| Individuals can take action, too. Small businesses are asking customers to buy gift cards for future use. Those who can afford this kind of investment will be doing some good. | Individuals can take action, too. Small businesses are asking customers to buy gift cards for future use. Those who can afford this kind of investment will be doing some good. |
| It is not only businesses that face economic distress. A sad fact of the economy in recent decades has been that far too many people have been relegated to economic positions that are even less secure than a small business. | It is not only businesses that face economic distress. A sad fact of the economy in recent decades has been that far too many people have been relegated to economic positions that are even less secure than a small business. |
| They get the worst end of entrepreneurship: exposure to bad circumstances with little benefit if things go swimmingly. All those people — hourly workers, gig economy workers, off-the-books cleaning and day care workers — now face a sudden drop in income. | They get the worst end of entrepreneurship: exposure to bad circumstances with little benefit if things go swimmingly. All those people — hourly workers, gig economy workers, off-the-books cleaning and day care workers — now face a sudden drop in income. |
| Updated June 22, 2020 | Updated June 22, 2020 |
| A commentary published this month on the website of the British Journal of Sports Medicine points out that covering your face during exercise “comes with issues of potential breathing restriction and discomfort” and requires “balancing benefits versus possible adverse events.” Masks do alter exercise, says Cedric X. Bryant, the president and chief science officer of the American Council on Exercise, a nonprofit organization that funds exercise research and certifies fitness professionals. “In my personal experience,” he says, “heart rates are higher at the same relative intensity when you wear a mask.” Some people also could experience lightheadedness during familiar workouts while masked, says Len Kravitz, a professor of exercise science at the University of New Mexico. | A commentary published this month on the website of the British Journal of Sports Medicine points out that covering your face during exercise “comes with issues of potential breathing restriction and discomfort” and requires “balancing benefits versus possible adverse events.” Masks do alter exercise, says Cedric X. Bryant, the president and chief science officer of the American Council on Exercise, a nonprofit organization that funds exercise research and certifies fitness professionals. “In my personal experience,” he says, “heart rates are higher at the same relative intensity when you wear a mask.” Some people also could experience lightheadedness during familiar workouts while masked, says Len Kravitz, a professor of exercise science at the University of New Mexico. |
| The steroid, dexamethasone, is the first treatment shown to reduce mortality in severely ill patients, according to scientists in Britain. The drug appears to reduce inflammation caused by the immune system, protecting the tissues. In the study, dexamethasone reduced deaths of patients on ventilators by one-third, and deaths of patients on oxygen by one-fifth. | The steroid, dexamethasone, is the first treatment shown to reduce mortality in severely ill patients, according to scientists in Britain. The drug appears to reduce inflammation caused by the immune system, protecting the tissues. In the study, dexamethasone reduced deaths of patients on ventilators by one-third, and deaths of patients on oxygen by one-fifth. |
| The coronavirus emergency relief package gives many American workers paid leave if they need to take time off because of the virus. It gives qualified workers two weeks of paid sick leave if they are ill, quarantined or seeking diagnosis or preventive care for coronavirus, or if they are caring for sick family members. It gives 12 weeks of paid leave to people caring for children whose schools are closed or whose child care provider is unavailable because of the coronavirus. It is the first time the United States has had widespread federally mandated paid leave, and includes people who don’t typically get such benefits, like part-time and gig economy workers. But the measure excludes at least half of private-sector workers, including those at the country’s largest employers, and gives small employers significant leeway to deny leave. | The coronavirus emergency relief package gives many American workers paid leave if they need to take time off because of the virus. It gives qualified workers two weeks of paid sick leave if they are ill, quarantined or seeking diagnosis or preventive care for coronavirus, or if they are caring for sick family members. It gives 12 weeks of paid leave to people caring for children whose schools are closed or whose child care provider is unavailable because of the coronavirus. It is the first time the United States has had widespread federally mandated paid leave, and includes people who don’t typically get such benefits, like part-time and gig economy workers. But the measure excludes at least half of private-sector workers, including those at the country’s largest employers, and gives small employers significant leeway to deny leave. |
| So far, the evidence seems to show it does. A widely cited paper published in April suggests that people are most infectious about two days before the onset of coronavirus symptoms and estimated that 44 percent of new infections were a result of transmission from people who were not yet showing symptoms. Recently, a top expert at the World Health Organization stated that transmission of the coronavirus by people who did not have symptoms was “very rare,” but she later walked back that statement. | So far, the evidence seems to show it does. A widely cited paper published in April suggests that people are most infectious about two days before the onset of coronavirus symptoms and estimated that 44 percent of new infections were a result of transmission from people who were not yet showing symptoms. Recently, a top expert at the World Health Organization stated that transmission of the coronavirus by people who did not have symptoms was “very rare,” but she later walked back that statement. |
| Touching contaminated objects and then infecting ourselves with the germs is not typically how the virus spreads. But it can happen. A number of studies of flu, rhinovirus, coronavirus and other microbes have shown that respiratory illnesses, including the new coronavirus, can spread by touching contaminated surfaces, particularly in places like day care centers, offices and hospitals. But a long chain of events has to happen for the disease to spread that way. The best way to protect yourself from coronavirus — whether it’s surface transmission or close human contact — is still social distancing, washing your hands, not touching your face and wearing masks. | Touching contaminated objects and then infecting ourselves with the germs is not typically how the virus spreads. But it can happen. A number of studies of flu, rhinovirus, coronavirus and other microbes have shown that respiratory illnesses, including the new coronavirus, can spread by touching contaminated surfaces, particularly in places like day care centers, offices and hospitals. But a long chain of events has to happen for the disease to spread that way. The best way to protect yourself from coronavirus — whether it’s surface transmission or close human contact — is still social distancing, washing your hands, not touching your face and wearing masks. |
| A study by European scientists is the first to document a strong statistical link between genetic variations and Covid-19, the illness caused by the coronavirus. Having Type A blood was linked to a 50 percent increase in the likelihood that a patient would need to get oxygen or to go on a ventilator, according to the new study. | A study by European scientists is the first to document a strong statistical link between genetic variations and Covid-19, the illness caused by the coronavirus. Having Type A blood was linked to a 50 percent increase in the likelihood that a patient would need to get oxygen or to go on a ventilator, according to the new study. |
| The unemployment rate fell to 13.3 percent in May, the Labor Department said on June 5, an unexpected improvement in the nation’s job market as hiring rebounded faster than economists expected. Economists had forecast the unemployment rate to increase to as much as 20 percent, after it hit 14.7 percent in April, which was the highest since the government began keeping official statistics after World War II. But the unemployment rate dipped instead, with employers adding 2.5 million jobs, after more than 20 million jobs were lost in April. | The unemployment rate fell to 13.3 percent in May, the Labor Department said on June 5, an unexpected improvement in the nation’s job market as hiring rebounded faster than economists expected. Economists had forecast the unemployment rate to increase to as much as 20 percent, after it hit 14.7 percent in April, which was the highest since the government began keeping official statistics after World War II. But the unemployment rate dipped instead, with employers adding 2.5 million jobs, after more than 20 million jobs were lost in April. |
| States are reopening bit by bit. This means that more public spaces are available for use and more and more businesses are being allowed to open again. The federal government is largely leaving the decision up to states, and some state leaders are leaving the decision up to local authorities. Even if you aren’t being told to stay at home, it’s still a good idea to limit trips outside and your interaction with other people. | States are reopening bit by bit. This means that more public spaces are available for use and more and more businesses are being allowed to open again. The federal government is largely leaving the decision up to states, and some state leaders are leaving the decision up to local authorities. Even if you aren’t being told to stay at home, it’s still a good idea to limit trips outside and your interaction with other people. |
| Common symptoms include fever, a dry cough, fatigue and difficulty breathing or shortness of breath. Some of these symptoms overlap with those of the flu, making detection difficult, but runny noses and stuffy sinuses are less common. The C.D.C. has also added chills, muscle pain, sore throat, headache and a new loss of the sense of taste or smell as symptoms to look out for. Most people fall ill five to seven days after exposure, but symptoms may appear in as few as two days or as many as 14 days. | Common symptoms include fever, a dry cough, fatigue and difficulty breathing or shortness of breath. Some of these symptoms overlap with those of the flu, making detection difficult, but runny noses and stuffy sinuses are less common. The C.D.C. has also added chills, muscle pain, sore throat, headache and a new loss of the sense of taste or smell as symptoms to look out for. Most people fall ill five to seven days after exposure, but symptoms may appear in as few as two days or as many as 14 days. |
| If air travel is unavoidable, there are some steps you can take to protect yourself. Most important: Wash your hands often, and stop touching your face. If possible, choose a window seat. A study from Emory University found that during flu season, the safest place to sit on a plane is by a window, as people sitting in window seats had less contact with potentially sick people. Disinfect hard surfaces. When you get to your seat and your hands are clean, use disinfecting wipes to clean the hard surfaces at your seat like the head and arm rest, the seatbelt buckle, the remote, screen, seat back pocket and the tray table. If the seat is hard and nonporous or leather or pleather, you can wipe that down, too. (Using wipes on upholstered seats could lead to a wet seat and spreading of germs rather than killing them.) | If air travel is unavoidable, there are some steps you can take to protect yourself. Most important: Wash your hands often, and stop touching your face. If possible, choose a window seat. A study from Emory University found that during flu season, the safest place to sit on a plane is by a window, as people sitting in window seats had less contact with potentially sick people. Disinfect hard surfaces. When you get to your seat and your hands are clean, use disinfecting wipes to clean the hard surfaces at your seat like the head and arm rest, the seatbelt buckle, the remote, screen, seat back pocket and the tray table. If the seat is hard and nonporous or leather or pleather, you can wipe that down, too. (Using wipes on upholstered seats could lead to a wet seat and spreading of germs rather than killing them.) |
| If you’ve been exposed to the coronavirus or think you have, and have a fever or symptoms like a cough or difficulty breathing, call a doctor. They should give you advice on whether you should be tested, how to get tested, and how to seek medical treatment without potentially infecting or exposing others. | If you’ve been exposed to the coronavirus or think you have, and have a fever or symptoms like a cough or difficulty breathing, call a doctor. They should give you advice on whether you should be tested, how to get tested, and how to seek medical treatment without potentially infecting or exposing others. |
| If you’re sick and you think you’ve been exposed to the new coronavirus, the C.D.C. recommends that you call your healthcare provider and explain your symptoms and fears. They will decide if you need to be tested. Keep in mind that there’s a chance — because of a lack of testing kits or because you’re asymptomatic, for instance — you won’t be able to get tested. | If you’re sick and you think you’ve been exposed to the new coronavirus, the C.D.C. recommends that you call your healthcare provider and explain your symptoms and fears. They will decide if you need to be tested. Keep in mind that there’s a chance — because of a lack of testing kits or because you’re asymptomatic, for instance — you won’t be able to get tested. |
| For these people, too, the temporary economic shock threatens to leave lasting damage. Without income flowing in, they are in deep trouble. Payday loans leave them trapped under a mountain of debt. Missed payments mean late fees and a permanent marring of credit scores. Missed rent can mean eviction. | |
| Wise policies can prevent this. A recent paper persuasively argued that the best way to prevent temporary shocks from becoming permanent problems is to eliminate short-term debt obligations to create some financial breathing room. For now, the government can institute a temporary forbearance on all major debt: mortgages, auto loans, student loans and big credit card payments. Such a policy is hardly onerous given that real interest rates (nominal rates minus inflation) are below zero. Such a policy would ensure that individuals did not emerge from this crisis burdened with debts and blemished credit. | |
| Renters need help, too. Rent can be deferred without counting missed payments toward late fees or eviction triggers, with aid given to small landlords who need help. Brakes such as these need to be enacted — and enacted quickly — to keep the bad from turning into worse. | Renters need help, too. Rent can be deferred without counting missed payments toward late fees or eviction triggers, with aid given to small landlords who need help. Brakes such as these need to be enacted — and enacted quickly — to keep the bad from turning into worse. |
| I take the plight of small-business people personally. Perhaps you do, too. | I take the plight of small-business people personally. Perhaps you do, too. |
| My mom ran a small video store in Los Angeles for over 20 years. She survived a major economic recession, two riots that rumbled past her window and even the opening of a Blockbuster nearby. | My mom ran a small video store in Los Angeles for over 20 years. She survived a major economic recession, two riots that rumbled past her window and even the opening of a Blockbuster nearby. |
| Eventually, though, her business succumbed to the changing times. The customers moved on. And my mother, having had a good run, was about ready to let go anyway. She had time to make a choice and move on herself. | Eventually, though, her business succumbed to the changing times. The customers moved on. And my mother, having had a good run, was about ready to let go anyway. She had time to make a choice and move on herself. |
| But that’s not the case for the hundreds of thousands of businesses that were flourishing just two weeks ago. Their customers want those businesses to continue. Their owners were not ready to move on. Their employees wanted to work. | But that’s not the case for the hundreds of thousands of businesses that were flourishing just two weeks ago. Their customers want those businesses to continue. Their owners were not ready to move on. Their employees wanted to work. |
| When my mother closed the doors for the last time, it was hard and there was sadness. But it was the sadness of a good run that, like all things, must end. | When my mother closed the doors for the last time, it was hard and there was sadness. But it was the sadness of a good run that, like all things, must end. |
| The businesses affected by the coronavirus face a different kind of sadness: the anguish of an unexpected disaster when everything was going well. That is a tragic end we must act now to prevent. | The businesses affected by the coronavirus face a different kind of sadness: the anguish of an unexpected disaster when everything was going well. That is a tragic end we must act now to prevent. |
| Sendhil Mullainathan is a professor of behavioral and computational science at the University of Chicago. Follow him on Twitter: @m_sendhil. | Sendhil Mullainathan is a professor of behavioral and computational science at the University of Chicago. Follow him on Twitter: @m_sendhil. |