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Pandemic Life: A Crippling Year For San Diego County’s Small Businesses

 March 17, 2021 at 11:40 AM PDT

Speaker 1: 00:00 Many San Diego businesses and their employees are celebrating the fact that San Diego has moved from the purple into the red COVID tier restaurants, gyms, movie theaters shops in malls can reopen or increase their capacity indoors. But despite the good news for many small businesses, the damage has already been done as part of our series pandemic life. One year on KPBS, investigative reporter, Claire triglyceride tells us about the devastating toll the pandemic has had on small businesses. She says their closures mean lost jobs, lost family wealth and afraid community fabric. Speaker 2: 00:39 My grandfather started it in 1941. Uh, and those days it was a small appliance store where he sold radios and photographic records and all kinds of small appliances Speaker 3: 00:51 And B sporting goods had been in Greg [inaudible] family for 80 years. Speaker 2: 00:56 And, uh, I've worked there for 40 years. So I was, I think 22, when I started working there, Speaker 3: 01:03 The store was in good shape heading into 2020. It had orders from youth sports teams, including the entire North park Speaker 2: 01:11 And then the, uh, pandemic hit. And I knew I was in trouble immediately. I, uh, they, the local little league played one game and then canceled the rest of the season. All the high school sports were closed. And, um, I knew I was in trouble and, uh, but I tried to keep a positive attitude and worked my way through it. But, uh, you know, I knew that, that I was going to have to make a difficult decision and I waited all the way till the end of the year to, you know, make the decision that I needed to make Speaker 3: 01:50 In January. He closed a and B's doors stories like philosophers have become all too familiar during San Diego county's pandemic year thousands of closed for good while countless others are barely holding on as they ride a roller coaster of openings and closings COVID nineteens final toll on San Diego's economy will take years to calculate, says Eduardo Velasquez, the research director at the San Diego regional economic development corporation. Speaker 4: 02:19 And it may very well be that we won't actually know for, for a long period of time, really how big the impact has been in terms of the permanent firm closures and the true job losses associated with that. Speaker 3: 02:33 But he says a few trends are already clear. Retail and hospitality will be impacted the most and small businesses are more likely to fall into those sectors. Speaker 4: 02:44 Typical, small business really only has about 14 or 15 days of cash on hand to cover their operations. So what that means is is if they have to shut their doors or stop serving their customers for more than two weeks, they burned through all their, their cash Speaker 3: 03:00 Reserves. And all of a sudden they're behind on every bill that they pay. This of course means massive job losses. Since February 20, 2,580 businesses have notified the San Diego workforce partnership of layoffs or furloughs accounting for 90,000 employees in a typical year, the partnership receives 100 to 150 such notices. And the closure of businesses goes beyond the financial impact, says Rachel McFarlane, the nonprofits director of business services. It's not only a financial impact, but it's a relationship and sort of emotional, very emotional decision for them about, um, having to consider potentially sacrificing certain things on the family side of the business. Um, and there've been quite a few business owners who have made significant personal investment back into their business to keep it running. That's true. Uh, Veronica Densi who owns the massage business, NOLA San Diego in the East village, Speaker 5: 04:01 I was using my disability. I'm a, I'm a disabled veteran, right. So I was using my disability to try to pad, you know, just so that I wasn't like $20,000 in background, you know, um, because I had the hope of being able to open back up one day and I'm doing that. I can't lie. I was dying a little loose every time I wrote that check because I was wondering if I was throwing this money away. And, um, I didn't even know if we would ever open again. And then, um, it got to a point where maybe once or twice I had to like dip into like my kid's college fund, I've got three daughters, you know, and I had to like dip into their college fund a little bit. And I'm just like, okay, well this has to stop. Um, because I can't bankrupt my family with no other answers. Speaker 3: 04:57 And Maribela Stratta who owns El Toro grill Taqueria in city Heights. She says she's barely holding on, but wants to keep the business to pass on to our children Speaker 6: 05:09 So they can move up with the vessels and they can continue. And having something doesn't mean that they have to be in a restaurant all the time. And I get in a career, you know, but they have something already, so they can start, you know, Speaker 3: 05:25 Family businesses are a big source of generational wealth, particularly for immigrants and ethnic minorities says one Pablo Pardo Guerrera and associate professor of sociology at UC San Diego. They're better at spanning local networks. So they're better at communicating with people inside the neighborhoods, for example, and attracting customers on the basis of the connections that families have made. And they do not require massive capital investments. So part of the, the advantages of small businesses is that they become assets. Speaker 7: 05:59 Um, and they can be passed on to other generations at as assets. This is not the same as what employment you can sort of leave your job to your kids. Speaker 3: 06:09 And like, with so many of the ills brought by the pandemic, businesses owned by people of color have suffered disproportionately a nationwide study found that since the onset of the pandemic black and Latino business ownership dropped by 41% and 32% respectively, meanwhile, white business ownership dropped by 17% Speaker 7: 06:32 Businesses owned by, uh, minorities tend to have less resources. So in a moment of prices, they're less likely to survive Speaker 3: 06:40 When businesses like a strata city Heights restaurant close, the impact on the neighborhood goes far beyond the services they provide Pardot. Guerra says, Speaker 7: 06:50 So this is something that will and can possibly fundamentally reshape the way we experienced the city neighborhoods that have more small businesses that are owned by black and Hispanic owners. We'll likely see more businesses that fail because of how the crisis is affecting them. And that means less revenue generation in those particular neighborhoods. It means less services for people who live in those neighborhoods, also less availability of local employment and all these negative economic outcomes in the long run translate into or lead to, um, sort of worse educational outcomes, worse career prospects, Speaker 3: 07:31 The pandemic, and its massive upheaval of small businesses should be a wake-up call and a chance for regional leaders to show they value. Those businesses says and Rica, Gundry, uh, the director of the city Heights business association. Speaker 7: 07:46 We want dynamic communities with many different types of businesses. Uh, we, we tend to forget that small businesses are the biggest employer in this country by far than any other corporation. And so we can't ignore them. We need to support them Speaker 3: 08:06 For Schloss. The owner of AB sporting goods. It's too late. He was unable to get a PPP loan because he didn't have any employees. And while he got $3,000 in a city, small business grant that covered less than one month's expenses, his store in North park now sits vacant and he's left wondering what to do next. Speaker 2: 08:28 I, uh, thought that I would feel much differently than I do now. I thought that I would feel like there's a huge, uh, weight being lifted on off of my shoulders and it has been financially, but as far as, um, knowing what's next for me, I'm still, I feel like I'm floating around in a boat to a certain extent because I'm a routine oriented person. I went to the store every day at seven 30 in the morning for 40 years. So that's, um, that's a difficult, um, routine to, um, you know, to stop all of a sudden Speaker 7: 09:08 KPBS news, Speaker 1: 09:10 Joining me to continue the discussion about the impact of the COVID pandemic on small businesses is one Pablo part of Gira, professor of sociology at UC San Diego and professor, welcome to the program. Speaker 7: 09:23 Thank you very much, Maureen. Speaker 1: 09:25 I heard you comment in the report about how family businesses are a reliable way to acquire generational family wealth. Can you tell us more about that? Speaker 7: 09:37 So one of the characteristics of a small family businesses is that they don't require huge investments to start and they can actually be very small and modest businesses that overtime and by creating a customer base can grow organically and in doing so, uh, accumulate wealth for the, the owners of the business and in particular, the families that are associated to those businesses. Um, and of course they also create, uh, employment locally, which is important, uh, to the city and in doing so also create more opportunities for wealth generation in the long run, Speaker 1: 10:21 Many immigrants to this country start or acquire a small business. Why is that a frequent starting point for people new to the country? Speaker 7: 10:29 So that's a really interesting question. And I think that part of it has to do with the fact that entering the employment market or the labor market as an employee is more difficult for people who have experience outside of the United States and credentials that are not from the United States. So for them, it's easier to start something from scratch. They have more control over what they're doing, their sort of future in terms of their business plans and the way that they are presenting themselves to customers and other businesses. Speaker 1: 11:07 So when something like the pandemic comes along, closing these livelihoods for people, what options are left open. Speaker 7: 11:14 So actually that's one of the problems because there are very few options. Um, most of the people who depend on small businesses, particularly those that have less than a million dollars in annual revenue, uh, have no source of additional income, of course, where they contraction of the economy in general finding employment, uh, in other organizations or firms is more difficult. So they have very few options. And in a sense, they have to try to survive as much as they can, the period of crisis, even though on average, they have less resources than larger firms and better capitalized businesses. Speaker 1: 11:57 Have we seen society having this kind of disruption to small businesses before maybe during the great depression? Speaker 7: 12:05 Uh, certainly the great depression is a great parallel. And actually the lessons that we have from the great depression in terms of eight direct and forceful intervention in the economy are important because those allowed for businesses to recuperate some of the losses that they had, some of the spaces and opportunities that they missed because of the depression and to start producing again, wealth and we activating, or we starting the economy. Speaker 1: 12:33 Now we heard that the pandemic lockdowns and business closures have hit minority owned businesses the hardest. Can you give us an idea? What does that look like in the neighborhoods involved, Speaker 7: 12:46 The issues or one of the facets of this is that people try to sometimes hustle for a living. And, um, I'm in one of those neighborhoods. And what I've seen lately is that our neighbors and friends in our particular neighborhood have tried to find alternative small side hustles or gigs in order to make ends meet. And this is a great because it's entrepreneurial-ism, but at the same time, it's very precarious and risky because they don't know where their next paycheck will come from, or indeed how they will pay the bills at the end of the month. So this is generating more anxiety and more precarity and amplifying many of the inequalities that we had seen before the crisis because of the uncertainty that it introduced in particular for these small businesses. Speaker 1: 13:45 You mentioned that the government in, during the great depression had a massive influx of, of programs and, and resources to try to kickstart the economy and small business, what do you think government should do now? Do you think Biden's relief packages enough? Speaker 7: 14:01 So I, I indeed think that the package is a tremendously good start. It's a good way to reactivate the economy after this period of crisis and economic downturn. At the same time, we are still facing long standing and the qualities that have to be addressed by systemic interventions, uh, beyond the pandemic. And Speaker 1: 14:26 Can you give us an example of what that would be? Speaker 7: 14:28 One of the strategies there of course is trying to tackle or target aid and targets, um, funding to businesses that are historically disproportionately affected by both inequalities and the economy and structural inequalities in society and in particular, by this pandemic. Speaker 1: 14:49 Now, now that we are out of the restrictive lockdown, businesses can start reopening. How would you encourage people to support small businesses? Would it be like heading to the local hardware store instead of home Depot, things like that? Speaker 7: 15:04 So, yes, completely. One of the strategies is, um, trying to support your local businesses because those are at the end of the day, the ones that will create both employment and better conditions in your community. So indeed if you have the option between going to home Depot and your local hardware store, go with the one that is closest to you, and that is closest to your community. Speaker 1: 15:30 I've been speaking with Juan Pablo part of guara, professor of sociology at UC San Diego. Thank you so much for joining. Speaker 7: 15:37 Thank you.

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COVID-19 has crushed many small businesses in the county, and the losses go beyond just jobs. In some cases, family wealth meant to sustain generations is gone and the fabric of communities frayed.
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