Small Businesses and Workers Still Need Help
By: Pennsylvania Budget, Policy Center
Tags: Covid, Pennsylvania, Workers, Small Businesses, State Budgets

Full policy brief by Maisum Murtaza, Claire Kovach, Stephen Herzenberg, and Marc Stier

Originally published July 7, 2021, at krc-pbpc.org.

The state budget enacted in late June has two glaring and interrelated missing pieces: it provides little support for the small businesses and for the working people of Pennsylvania who are still suffering from the impact of the pandemic.

Small businesses are still hurting.

Fifteen months after the beginning of the pandemic, small business revenue in Pennsylvania is still down 28% relative to pre-COVID levels. It has continued to decline in the last two months.

As of June 21st, the number of open small businesses in Pennsylvania was down compared to the start of 2020 by about 37%. The last two months have seen a decline of roughly 10 percentage points.

Workers are still hurting, too.

As of May 2021, Pennsylvania is still more than 400,000 jobs short of the level in February 2020.

The unemployment rate has remained around 7% for the past nine months, two to three percentage points higher than before COVID.

Employer demand, measured by job postings, was 18% short of pre-pandemic levels as of last week.

Small Businesses and Working People Need Each Other

Helping working people and helping businesses go together.

Providing support for small businesses creates jobs. Providing support for working people — and ensuring that wages are high — enables them to purchase from local businesses.

Since late 2020, we’ve had mostly the right federal policies — but mostly the wrong policies at the state level. Federal support for small businesses and working people has been critical to bringing the economic recovery to this point. We need state government to step up and do its share to ensure that the economic recovery continues and that it leaves no one out. The state should

provide at least $500 million to help small businesses stay afloat and more rapidly hire back workers.

give low- and moderate-wage workers a rebate on the taxes they pay to the state.

provide hazard pay to frontline workers.

raise the minimum wage.

These policies will not only give small businesses direct help but indirectly help them by raising the wages of people who will put the money they receive back into their local economy by paying for basics such as rent, groceries, and other daily needs.

At this moment, Pennsylvania’s state lawmakers are sitting on billions of dollars in federal ARP assistance — money that comes from our taxes — that could be a lifeline to small businesses and working families, as well as making our economy more equitable. The failure of the Republican leadership in the General Assembly to act in support of our economy will increase the number of small businesses that never come back, the number of workers who remain without a job, the number of families that get evicted, and the amount of human suffering caused by a sluggish economy. Historians will judge harshly the failure of Pennsylvania’s state lawmakers to use the funds provided by President Biden and the U.S. Congress.

Click here to read the full policy brief.