Many Small U.S. Businesses Can't Afford to Pay Quarantined Employees a Full Month
More than half expect revenue losses of 10 percent to 30 percent
Half of small U.S. businesses who have employees under quarantine can't afford to pay their employees for a full month, according to new research the Society for Human Resource Management (SHRM) released today. More than half of small business owners in the U.S. expect revenue losses of 10 percent to 30 percent.
SHRM conducted three surveys between March 12 and March 18 and received responses from 518 SHRM members in the U.S., 507 small U.S. business owners, and 492 U.S. workers. All respondents worked at businesses with 1 to 100 employees.
Almost half of all service and small businesses that involve physical work, such as construction, said they are unable to conduct any of their operations remotely. As of March 31, 32 states have issued stay-at-home orders to prevent the spread of the coronavirus, but one in five small businesses can afford to pay employees for only one week or less if their city or town issues a quarantine, SHRM found.
The quarantine is expected to have a dire impact: 58 percent of U.S. workers say that in less than a month they won't be able to meet their basic financial needs. Workers across the spectrum of industries—those in physical jobs, the service industry, such as healthcare and retail; and the knowledge economy, such as banking and administrative support—will be hardest hit, according to SHRM.
Some relief is available under the just-passed Coronavirus Aid, Relief and Economic Security (CARES) Act: Through it, the U.S. Small Business Administration (SBA) will manage payroll-protection loans for qualifying organizations with fewer than 500 employees.
Some cities are stepping forward to offer help to small business owners. New York City will offer interest-free loans of up to $75,000 to businesses with fewer than 100 employees, if the business can demonstrate sales decreases of 25 percent or more related to the outbreak, according to Crain's New York.
[SHRM members-only toolkit: Managing Through Emergency and Disaster]
"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."
Many Americans, he noted, are living very close to paycheck to paycheck and "it's creating a level of stress that cannot be overstated."
Employees are saying they are more concerned about what this means for their family and for them financially than they are of getting COVID-19, he said during a conference call on Tuesday.
More than 99 percent of the nation's 28.7 million firms are small businesses—companies with 1 to 499 employees—and 88 percent have fewer than 20 employees, according to JP Morgan Chase.
Nearly a quarter of small businesses have not discussed any preparedness measures for dealing with the pandemic. Some small business owners, though, are finding ways to help their employees during this time.
These are the top five preparedness measures that SHRM found small business owners are taking:
- 90 percent are encouraging sick employees to take time off. One-third of small businesses, though, offer no paid leave. Some employers will be required to provide paid sick leave during the pandemic; there are exceptions for some small employers.
- 83 percent provide employees with health tips and information related to the virus.
- 73 percent provide health products such as masks and hand sanitizers to limit transmission of the virus.
- 62 percent require employees to use health products to limit transmission.
- 62 percent are restricting employee travel.
At the time these surveys were conducted, there were no mandatory stay-at-home restrictions. California became the first on March 19, a SHRM researcher noted. President Trump issued guidelines March 16 for slowing the spread of the coronavirus over the next 15 days. Those guidelines included not participating in social gatherings of more than 10 people or visiting bars, restaurants and food courts. On March 29, Trump extended the advisory for people to practice social distancing until the end of April.
The surveys also were conducted before Congress approved stimulus packages. For more information on help meeting payroll, read the SHRM Government Affairs Team's CARES Act Paycheck Protection Program FAQs.
Governments, Large Organizations Offer Help to Small Businesses During Pandemic
Large organizations and cities, counties and states around the U.S. are stepping forward to offer relief. Delaware, for example, is giving out no-interest loans of up to $10,000 per month to hospitality-related businesses impacted by coronavirus, Delaware Online reported. In Wisconsin, state officials launched a $5 million grant program to help small business owners impacted by the crisis, according to WKOW.com. It's for businesses with no more than 20 employees.
(SHRM Online)List of Coronavirus (COVID-19) Small Business Relief Programs
Small businesses have been hit hard by mandatory closures and safety measures required to slow the spread of the coronavirus (COVID-19). But businesses have a growing number of resources and relief programs they can access.(Forbes)
Small Businesses Cope with Extended Social Distancing Guidelines
President Trump officially extended the administration's social distancing guidelines through the end of April, and some local business owners are having to cope with the change in pace. Pascagoula Nutrition serves teas packed with vitamins. It's also the only shop that remains open at Anchor Square. Jessica Hightower, owner of Pascagoula Nutrition, is looking for new ways to generate business over the next month while limiting contact with customers.(WLOX)
How California Businesses Can Get Help to Outlast Coronavirus, Keep Their Employees
With business slowing because of the coronavirus outbreak, Shaun Cho said he had no choice but to cut his 10 employees' hours at New World Cleaners in Sacramento.He didn't want to do it.
At a time like this, many businesses might be tempted to make "a clean break" by laying off staff, said Daniela Urban of the Sacramento-based Center for Workers' Rights. That would be a mistake, she said.
"Once you terminate a worker," Urban said, "it's really hard to go back."
(Sacramento Bee)
Illinois Small Businesses Scramble for Grants, Loans to Endure Coronavirus
Gov. J.B. Pritzker on March 25 unveiled more than $90 million in new emergency assistance dollars, mostly focused on businesses outside Chicago. The package includes $14 million in emergency grants for the hospitality industry, which many of the city's bars, restaurants and hotels are lining up to try to win via a lottery.(Chicago Tribune)
An organization run by AI is not a futuristic concept. Such technology is already a part of many workplaces and will continue to shape the labor market and HR. Here's how employers and employees can successfully manage generative AI and other AI-powered systems.
Related Content
HR must always include human intelligence and oversight of AI in decision-making in hiring and firing, a legal expert said at SHRM24. She added that HR can ensure compliance by meeting the strictest AI standards, which will be in Colorado’s upcoming AI law.
The proliferation of artificial intelligence in the workplace, and the ensuing expected increase in productivity and efficiency, could help usher in the four-day workweek, some experts predict.
Learn how Marsh McLennan successfully boosts staff well-being with digital tools, improving productivity and work satisfaction for more than 20,000 employees.