COVID-19 Impact on Small Businesses in NYC: An Analysis | MyPaperHub

The pandemic resulted in the unprecedented widespread closure of businesses in the United States (US). Small businesses in NYC suffered closure from factors like health concerns, downward demand shifts, and policy mandates(Fairlie 727). Nonethelesswhile more New Yorkers are getting COVID-19 vaccines daily, and one in four have already received at least one dose, there is still no hope for small businesses. Notably, one year down the line, more than 78% of medium and small businesses struggle with the pandemic’s negative impacts (Marroquin). Besides, Census Bureau data affirms that drawbacks like decreases in receipts, sales, and revenue still ravage more than 77% of small businesses in NYC (Marroquin).In this regard, specific statistics of taxable sales, retail operations, employment, and NYC relief programs highlight the effects of the pandemic on NYC small businesses. 

Taxable Sales and Temporary Closures

​Staten Island, Bronx, Queens, Brooklyn, and Manhattan recorded reduced taxable sales and multiple business closures. According to the NYC State Comptroller, DiNapolithe departments of Finance and Taxation noted reduced taxable sales due to the pandemic. Except for non-store retailers, all subsectors recorded over 30% reduction in taxable sales in retail trade (DiNapoli). However, online retailers experienced an over 80% increase in sales because of increased electronic shopping. In this regard, NYC experienced a 21.6% annual growth in online taxable sales as opposed to a 14.2% growth before the pandemic. Therefore, while walk-in stores faced negative consequences, online stores blossomed during the pandemic. 

​Some small businesses permanently closed while others closed temporarily. According to the city’s statistics, while 55% of small businesses reported being operational, 41% temporarily closed (Bartik 17656)For instance, more than 90% of NYC restaurants were unable to pay rent according to a 2020 NYC Hospitality Alliance survey (Marroquin)The report also noted that, compared to one year ago, restaurant sales were 44% lower, and more than 54% of these restaurants had to conduct layoffsor close down. Marroquin blames government-mandated restrictions and the negative implications of the pandemic on the hospitality industry predicament. 

Subsector Employment

​NYC Governor Cuomo’s restrictions and directives caused the closure of many retail establishments, shutdown of the city, and massive layoffs. According to DiNapolionly essential businesses like liquor, beverage, and food stores were allowed to operate for instore trade. However, the closure of nonessential businesses caused more than 500,000 job losses in the first few months. Nonetheless, immigrant, minority, and female-owned businesses faced more severe negative impacts of the pandemiccausing social inequalities (Fairlie 740)BesidesNYC small businesses reports note that, while overall employment reduced by 39%, the number of part-time employees reduced by 57% and those of full-time employees by 17% (Bartik 9). However, drug stores, pharmacies, beverage, and food stores witnessed higher employment levels. 

​According to foot traffic dataa severe drop in tourists and commuters entering NYC caused fewer sale opportunities for retailers. Accordingly, reduced in-person patronage lowered employment in the clothing accessories and clothing stores by more than 40% (DiNapoli)Nevertheless, the studies of DiNapoli also add that supply chain disruptionsreduced demand, and concerns about employee health resulted in business closures which in turn caused massive layoffs.Marroquin’s NYC Hospitality Alliance report also affirms that more than 140,000 employees lost their jobs in nightclubs, restaurants, and bars across NYC. 

Retail Operations

​Widescale reduction in revenues across NYC caused theclosure of many retail stores. According to the NY State Comptroller, more than 25% of wholesale and retail establishments reported either temporary or permanent closures since the pandemic erupted in 2020 (DiNapoli)The comptroller also noted that small businesses were unsuccessful in adjusting to the pandemic and changing business landscape, and many of them had difficulties meeting their costs of operation such as rent. For instance, Manhattan’s 16 major corridors recorded more than 254 available spaces according to a commercial real estate firm’s quarterly report (DiNapoli). Accordingly, declined store revenues caused a drop of more than 700 dollars per square foot in average corridor-asking rent

​The pandemic also caused a shift in household spending behaviors which affected small businesses. According to the US Census Bureau, coronavirus caused adverse economic and social effects leading to shifts in spending patterns among NYC metropolitan dwellers (DiNapoli). For example, many New Yorkers complained that they were either concerned about their health risks associated with going out in public or their normal shopping locations had limited operating hours or were closeddue to the pandemicConsequently, more than 47% of walk-in customers used their smartphone apps, credit cards, or resolved to online spending instead (DiNapoli)Therefore, small businesses in NYC that could not adjust were faced out. 

Federal Programs

​The NYC governance understands that its current unemployment rates can only be salvaged by the revival of small businesses. In this regard, Governor Cuomo has robust policies to save the fate of more than 48% of New Yorkers working in small businesses (Bartik 4)Experts also agree that, even if the NYC economy fully reopens, the governance must do more to supplant the financial crisis (Marroquin). In this regard, the city uses Small Business Administration’s Loan Forgiveness, Economic Injury Disaster Loans (EIDLs), and the Paycheck Protection Program (PPP) programs to cushion small businesses from adverse effects of the pandemic (DiNapoli). For instance, EIDLs include low-interest, non-forgivable loans designed to save retail business establishments from the pandemic’s economic harshness. 

​According to Pulse Survey data, small businesses in NYCincreased their reliance on federal stimulus packages during the pandemic period. For example, NY State increased its EIDL allocation from 324 million USD early in 2020 to 17 billion USD as of October the same year. Besides, packages like PPP also protect employees by providing retail establishments with loans to retain their workforce (DiNapoli)Accordingly, besidesmaking the loans more accessible to small businesses, NYC approved 52% more retail firms for the loans and saved at least 38% of retail jobs that would otherwise have been lost to layoffs. 

Retail Sector Way Forward 

​In the city’s plan to returning to normal, retail sector diversity and robustness is critical. Trends such as intensifiedonline shopping and reduced demand for goods like sporting supplies must be stabilized (DiNapoli)Similarly, experts expect stability in consumer demand for medical items and groceries to stabilize over time (DiNapoli). However, increased consumer preference for online stores and contactless delivery is likely to continue, and the closure of subsectors like high-profile stores is likely to take longer to recover (DiNapoli)Nevertheless, experts agree that financial assistance is necessary to manage and stabilize the NYC rent situation to save the city’s landlords and tenants. 

​Nevertheless, the city’s stimulus packages can be further utilized to directly support businesses that are struggling to remain open and also offering unemployment benefits to its residents. In this regard, DiNapoli notes that the extension of the programs will increase tax sales, aid retailer revenues, and help pay for labor and other expenses. Besides, making the funds accessible to both local and federal governments will ensure creative programs are conducted at the city, community, and local levels. Bartik also notes that owners of small business establishments are more willing to take loans with the forgiveness feature unlike the interest loan programs (17666)Therefore, incentives are necessary to keep retail establishments operational while sustaining jobs in the city. 

​In summation, specific statistics of taxable sales, retail operations, employment, and NYC relief programs highlight the effects of the pandemic on NYC small businesses. The extent of the pandemic’s economic damage to the city’s small businesses is evident from different perspectives. For instance, the eruption coronavirus resulted in reduced taxable sales and many the closure of businesses across NYC. While the revenues of the walk-in stores plunged, revenues of online stores stabilized and increased because many New Yorkers increased their preference for online shops. Besides, the pandemic resulted in massive job losses in the city’s small business subsector. The widespread reduction in revenues across NYC also led to reduced retail operations and many stores stopped operating. However, experts are optimistic that the city’s vibrant stimulus packages will revive the small business subsector by providing financial incentives like the PPP and EIDLs. Accordingly, stability is imminent in the online shopping trend and the reduction in the demand for certain commodities. Notably, the city’s income circulation depends on taxation revenue from its working population and numerous small businesses. 

 

Works Cited 

Bartik, Alexander et al. The Impact Of COVID-19 On Small Business Outcomes and Expectations. Harvard Business School, 2021, pp. 5-18, https://www.hbs.edu/ris/Publication%20Files/20-102_1c8a5b54-d400-4a8d-b136-d6890cf876dd.pdf. Accessed 22 Apr 2021.

Bartik, Alexander W. et al. "The Impact Of COVID-19 On Small Business Outcomes and Expectations". Proceedings of The National Academy of Sciencesvol 117, no. 30, 2020, pp. 17656-17666. Proceedings of The National Academy of Sciences, doi:10.1073/pnas.2006991117. Accessed 22 Apr 2021.

DiNapoli, Thomas P. "The Retail Sector In New York City: Recent Trends and The Impact Of COVID-19". Office of The New York State Comptroller, 2021, https://www.osc.state.ny.us/reports/osdc/retail-sector-new-york-city-recent-trends-and-impact-covid-19. Accessed 22 Apr 2021.

Fairlie, Robert. "The Impact Of COVID‐19 On Small Business Owners: Evidence from The First Three Months After Widespread Social‐Distancing Restrictions". Journal of Economics & Management Strategyvol 29, no. 4, 2020, pp. 727-740. Wiley, doi:10.1111/jems.12400. Accessed 22 Apr 2021.

Marroquin, Mario. Lohud.Com, 2021, https://www.lohud.com/story/money/business/2021/03/22/covid-new-york-small-business-report-pandemic-impact-revenue/4769606001/. Accessed 22 Apr 2021.

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