WINTER BRINGS CHALLENGES FOR SMALL BUSINESSES
The “Game of Thrones” tagline “winter is coming” is especially ominous for small businesses in this pandemic battered year.
A new report from online payroll and benefits platform Gusto predicts dire outcomes if more government relief funding is not made available to help businesses through the cold weather months.
The report, authored by Gusto economist Luke Pardue, outlines a scenario where retailers and leisure and hospitality businesses including restaurants hemorrhage 1.4 million jobs as cold weather makes pandemic adaptations like outdoor dining and queuing outside shops with capped capacities untenable in large swaths of the northern and western U. S.
If coronavirus cases spike, as they already are in Colorado and other parts of the country, and economic activity slows even more, Pardue predicts that small businesses in those sectors could shed 2.8 million jobs.
Denver would not be spared. Gusto, which has a large office in the city, predicts that hospitality and retail businesses in the metro area could let go of 33,500 workers over the next few months and 333 small businesses — those with 100 employees or fewer — could close by late January.
“Denver has experienced a pretty substantial recovery
since the depths of the recession. About half of those gains were due to outdoor adjustments business was able to make,” Pardue said “I know Denver people are used to cold weather, but it’s kind of an open question if when the snow comes if they will wait in line when the bookstore has a capacity limit.”
Gusto’s predictions rely on some assumptions. Chief among them that half of all retail and leisure jobs U. S. employers added back this summer after mass job cuts this spring were made possible by adjustments like expanded al fresco dining. Pardue’s report acknowledges other factors such as the rollback of government restrictions and shutdown orders have played a part in the country’s uneven economic recovery. The report cites a study from the National Bureau of Economic Research to assert that customer traffic “was much more responsive to business efforts to decrease crowding within the establishment.”
Seasonal job losses are common in the Denver area. The leisure and hospitality industry has employed 10,500 fewer workers on average in February when compared to the previous September over the last 10 years, according to Bureau of Labor Statistics data. But Pardue said his predictions aren’t impacted by that seasonality because he is focused on the months of October, November and December when employment numbers are relatively flat, only varying by a few thousand jobs.
Colorado’s unemployment rate fell to a pandemic low of 6.4% last month after a household worker survey indicated 63,400 people in the state found employment between August and September.
In a recent email to The Denver Post, state labor economist Ryan Gedney reiterated a point he has made repeatedly in recent weeks: Job recovery over the next six months will depend heavily on demand for restaurant dining as the weather turns cold and the industry’s ability to accommodate that demand.
“Additionally, significant shifts in demand for seasonal travel and holiday spending will impact sectors like arts, entertainment, and recreation, hotels, and retail,” Gedney wrote. “Lack of additiona and timely federal government aid could also impact recovery for the U. S. and Colorado.”
Local restaurants are certainly worried about winter weather and rushing to set up options to give diners space but keep them warm
The Colorado Restaurant Association surveyed 135 businesses across the state this month and found half of them plan to take advantage of winter patio programs in their communities. The average cost of setting up a space that is habitable in cold weather is $ 6,000, the survey found. That’s a sizable amount of money when 91% of the responding restaurants say their revenue over the summer was down compared to 2019 Half of the surveyed restaurants say they will close in the next six months if business conditions don’t improve.
“Restaurants are extremely worried about surviving the winter,” association CEO Sonia Riggs said in a statement. “Restaurants need cash assistance and more capacity if they’re going to survive.”
Pardue’s report outlines some policies that he feels could make the winter easier on businesses. At the top of the list is allowing federal Paycheck Protection Program money to be issued for things beyond employee payroll, such as heating lamps for patio spaces.
There is one problem with that Tony Gagliardi, Colorado director for the National Federation of Independent Businesses, says his organization research has found that 86% of all NFIB members who received PPP loans earlier this year have already spent all the money.
“Our members are really very concerned about Congress being able to pass a second round of PPP,” Gagliardi said. “There is uncertainty. And when you have uncertainty on Main Street, you have economic problems.”