Most Workers And Businesses At The Heart Of US Economy Can’t Meet Financial Needs
Above photo: “For Sale By Owner” and “Closed Due to Virus” signs are displayed in the window of Images On Mack in Grosse Pointe Woods, Michigan. Paul Sancya/AP.
A survey of small businesses and workers conducted by the Society for Human Resource Management published on April 1 finds that small businesses and workers are being hit hard by the COVID-19 crisis. Their findings reveal the real class divide in the United States in that those workers who are essential, such as those who work in construction, manufacturing, transportation, education, and food, have the highest rates of not being able to meet their basic needs because of the shutdown while professionals are less affected.
This poll highlights the need to demand financial security for everyone during this time of necessary physical distancing. We need a moratorium on evictions and foreclosures, full coverage of health care by the government, higher pay for essential workers and adequate unemployment benefits for those who are unable to work.
The Federal Reserve already announced a new Main Street Lending Program of up to $2.3 trillion in loans with deferred interest and payments for one year for states and small businesses and credit for households. This was announced on April 9, the same day of the report on new unemployment claims. That number was 6.6 million for the second week in a row, making a total of 17 million new claims in just three weeks.
The Federal Reserve is buying bad corporate debt and providing funds to banks. It could also purchase personal medical debt and student loan debt, which would provide immediate much-needed relief to households. That would be a real Main Street bailout.
Here is the press release on the new poll from SHRM:
Half of America’s small businesses can’t afford to pay employees for a full month under the current economic lockdown meant to slow the spread of the coronavirus pandemic. This is according to new surveys released today by SHRM (Society for Human Resource Management). The research found most businesses expect to see a decrease in revenue, while businesses in certain sectors can expect even greater losses. Additionally, a majority (58 percent) of American workers will be unable to meet basic financial needs within a period of 30 days or less.
The surveys polled a sample of American workers, HR practitioners, and small business owners regarding the expected economic impact of the coronavirus on their organization. Findings include:
- Over half of small businesses expect revenue losses of 10-30 percent, while one in five expect losing more than 30 percent, and 4 percent expect a total loss of revenue and the closure of their business;
- 1 in 5 small businesses can’t afford to pay employees for more than a week under quarantine;
- Over half of American workers say their job cannot be done remotely and one third of small businesses say none of their business processes can be done remotely;
- 6 in 10 American workers say they will be unable to meet basic financial needs (rent, groceries, bills, etc.) in 30 days or less;
- 1 in 5 American workers say they will be unable to meet basic financial needs in one week or less.
“There are tough times ahead for all. Headlines have highlighted the pandemic’s impact on Wall Street, but the bigger story might be the economic shockwaves hitting the businesses and workers on Main Street,” said Johnny C. Taylor, Jr., SHRM-SCP, SHRM president and CEO. “This new data underscores this pandemic is, in many ways, more challenging than the 2008 financial crisis. While much remains uncertain, business leaders have been reaching out to SHRM for information, and we will continue to be a trusted resource to those facing big questions and difficult decisions.”
Taylor added: “This virus shows nothing tests a culture like a crisis. If a company’s principles are just words on an outdated webpage, this stress could crack that workforce. But if principles exist in a real culture, that’s where people come together and thrive through hardship.”
The research also shows that financial impacts to American workers vary by industry.
Workers in physical industries—e.g., construction, manufacturing and transportation—expect the worst impact, as 72 percent report an inability to meet basic financial needs in a month or less. Service industry workers, such as accommodation, education, food and retail, expect a similar impact (62 percent), while workers in knowledge industries, including finance, insurance, law, research, government and others, were far less likely (38 percent) to anticipate financial difficulties.
Additionally, nearly 80 percent of HR professionals had formal or informal business continuity plans in place as of early March. However, nearly a quarter of American workers report their organization hasn’t shared how management was reacting to COVID-19—highlighting a potential disconnect between workers and executives.