The COVID-19 pandemic has hurt small businesses owned by people of color, immigrants, and women more than other groups, according to new research.
Between February and April, the number of active business owners in the country fell by 22%, from 15 million to 11.7 million, the National Bureau of Economic Research study found. The comparable number during the Great Recession was 5%, or 730,000 business owners, the report notes.
“The drop in business owners was the largest on record, and losses were felt across nearly all industries and even for incorporated businesses,” wrote report author Robert Fairlie, an economics professor at the University of California, Santa Cruz.
During this period of the COVID-19 pandemic, the hardest hit small business owners were:
- African American, 41%
- Latinx, 32%
- Asian, 26%
- Immigrant, 36%
- Female, 25%
Business owners from these segments of the population suffered greater losses, because they tended to be in industries most battered by the pandemic, such as construction, restaurants, hospitality, and transportation, the report explained.
The study looked at losses using data from the Census Bureau’s Current Population Survey from April, the first full month the United States felt the impact of the worldwide coronavirus crisis. Sheltering-in-place became the norm, forcing businesses, both large and small, to stop operating.
“More permanent mass closures of small businesses in the United States are likely to have a dramatic effect on employee job losses, further income inequality, and contributing to a prolonged recession,” Fairlie concluded.
Recognize your brand’s excellence by applying to this year’s Brands That Matter Awards before the early-rate deadline, May 3.
