Small Businesses Are Closing At A Rapid Pace, With Restaurants And Retailers On The West Coast Among The Hardest Hit

A new report released Wednesday by Yelp bears bad news for small businesses in the U.S. trying to weather the ongoing coronavirus pandemic. The Economic Average report, which tracks business closures through Yelp customer review listings, found that an estimated 163,735 businesses have closed in the U.S. since March 1. The numbers represent an increase of 23% since July 10, when the count of closures sat at 132,580.

Retailers, bars and restaurants continue to be among the hardest hit businesses. Some 32,000 restaurants have shuttered since the start of the pandemic, with 61% expecting closures to be permanent. Nightclubs and bars, a smaller market, have lost about 6,451 businesses, over half permanently, while retailers have seen 30,374 closures. 

Small businesses on the West Coast have been hit particularly hard. High rates of Covid-related closures in the Las Vegas and Honolulu metro areas, likely exacerbated by a slowdown in tourism, have put Nevada and Hawaii alongside California for the highest rates of closures per capita. Meanwhile, six of the eight worst-hit metro areas have been in the Golden State. 

Some sectors, however, have seen small businesses remain robust. Healthcare companies, like hospitals and clinics, have unsurprisingly remained healthy, as have professional services firms like law, real estate and accounting businesses. Home and auto services have also remained strong, with plumbers and contractors making up a miniscule fraction of closures. 

The Yelp data puts a slight damper on the optimistic jobs report released by the Bureau of Labor Statistics earlier this month, which found the unemployment rate had fallen from 10.2% to 8.4% in August. The most notable increase in jobs was attributed to federal hiring for the 2020 Census. Retail and hospitality jobs saw slight increases as well, but remain far short of the pre-coronavirus norm. In effect, while the retail, dining and hospitality industries may be slowly recovering, the most vulnerable businesses in these sectors are continuing to fail. 

The news comes amid continued deadlock in Congress over passing a new stimulus bill. Republicans and Democrats remained frozen over the details of renewed relief. Last week, Senate Republicans’ “skinny” relief bill—which would’ve allocated an extra $300 for unemployment benefits and expanded PPP funding, while giving businesses significant liability protections—died on the floor after receiving insufficient votes to break the Democratic filibuster. A new $1.5 trillion bipartisan relief bill faces an unclear fate. Without the relief of PPP loans or increased demand from stimulus spending, it’s likely that more small businesses will continue to fold as coronavirus restrictions persist.

While the Yelp data focuses primarily on small businesses (and thereby small employers), large businesses, which may have more cash on hand, are also making painful cuts, even if they aren’t closing. Just this week, Citigroup announced that it would be making layoffs, despite promises earlier in the year that it would refrain from doing so through 2020. The airline industry is similarly pressed. Earlier this summer, thousands of Delta and Southwest employees reportedly opted into voluntary retirement plans, while United has warned that without significant relief, it could lay off some 36,000 employees this fall.