The government is shutting down the city’s small businesses to slow the spread of coronavirus and flatten the curve. As we take this drastic step to save the patients needing serious medical attention, we must do our part to save our vulnerable small businesses and our economy.
Five steps can help save small businesses during this pandemic-induced recession, inspired by student loan policies designed to relieve and manage debt. Many of us with student debt knew that if we had difficulty finding that first job, had a gap between jobs, or worse, we could defer payments until things got better. The federal government allows loan forgiveness if you make career choices benefitting the public.
While big corporations, government, and the information economy may survive, according to the Schwartz Center for Economic Policy Analysis there are 461,000 small businesses employing 4.1 million people endangered by the economic crisis. Bold and urgent steps can help save our city’s mom and pop shops and their workers.
Many small business owners need or will need relief from paying rent, assurance they won’t get evicted, and payroll support until they can reopen. As the federal government debates its next move, New York City can take these five steps to save small businesses:
- Stop Commercial Evictions
- Defer Property Taxes
- Defer Commercial Rent Payments
- Defer Mortgage Payments
- Guarantee Jobs and Healthcare for Workers
As Congress again uses American tax dollars to help banks with zero percent interest rates, we need something back. Big banks getting federal help should be required to defer mortgage payments for commercial and residential landlords whose tenants are impacted by the coronavirus. Similarly, New York City could also defer its property tax collections.
Commercial and residential landlords who claim deferrals from mortgage and tax payments should be required to defer rent payments from affected tenants affected. For its part, New York City should also stop commercial evictions, which is already has done
Small business owners who receive deferrals also have to give something back. They need to maintain full payroll, particularly for those eligible for federally-reimbursed paid leave, or if necessary, lay them off onto state unemployment with a guaranteed job when the business reopens at the end of the pandemic.
This would enable small businesses employees to maintain income and keep their jobs. Those forced onto unemployment could rest assured with a minimum of six months’ income, healthcare through Medicaid, and the promise of their job waiting for them. The Families First Coronavirus Response Act will offer federal support for nutrition assistance, paid leave, immediate unemployment, as well as an opportunity for states to extend unemployment benefits.
Some might want the market to sort out winners and losers. Others want direct payments to households. The most sustainable way to keep workers afloat is to find a way to reopen their workplaces at the end of the pandemic and get them back to work.
If we do nothing, countless small businesses will go under, potentially leaving 4.1 million New Yorkers and the small business owners who employ them all looking for jobs in a post-pandemic economy.
The federal government has more power to help workers keep their jobs and keep businesses open during the pandemic. It can inject money into the New York economy--and elsewhere--by opening field clinics and hospitals, extending unemployment benefits, increasing food stamp eligibility as well as disability, TANF, and Social Security checks.
But the city is not without innovative ideas. We need to pull every lever. When we come out the other side of this pandemic, we want our favorite restaurant, bar, or salon to reopen with the bartender or stylist who knows our name ready for us and our dollars to support them and our economy. All we need is the compassion to understand everybody is getting squeezed and the will to help everybody who needs relief.
If there is one thing to learn from this pandemic, it is that we are all in this together.
Ben Kallos is a New York City councilman representing parts of the Eastside of Manhattan who himself has helped run small businesses.
Teresa Ghilarducci is a professor of labor economics and the Director of the Schwartz Center for Economic Policy Analysis (SCEPA) at The New School.