December 16, 2020

Viral Economics: Small businesses struggle to keep their employees amid pandemic

Co-owner of King’s Peak Coffee Roasters, Brandy Ledbetter, and her daughter, Sadie Lynn Ledbetter, pose for a photo inside their family-owned business at 412 South 700 West, Suite 140. PHOTO BY TURNER BITTON
Co-owner of King’s Peak Coffee Roasters, Brandy Ledbetter, and her daughter, Sadie Lynn Ledbetter, pose for a photo inside their family-owned business at 412 South 700 West, Suite 140. PHOTO BY TURNER BITTON|||| Co-owner of King’s Peak Coffee Roasters, Brandy Ledbetter, and her daughter, Sadie Lynn Ledbetter, pose for a photo inside their family-owned business at 412 South 700 West, Suite 140. PHOTO BY TURNER BITTON|||| ||||
By Christian Sears and Turner Bitton

The economic impact of the coronavirus and measures aimed at controlling its spread have carved deep wounds into the finances of many Americans. What began as a public health crisis has grown into an economic catastrophe that cannot be overstated. Failure to control the spread of the virus has created instability for businesses and impacted the jobs of millions of Americans.

To avoid the threat of financial disaster, many Salt Lake City residents and businesses have had to adapt quickly and sacrifice much to make ends meet.

For many families, the rapid transition to working from home, digital commuting, or implementing new safety protocols has redefined family and work roles. These sudden changes, coupled with the uncertainty of financial relief were a perfect storm for many local businesses. In early spring, Congress took note and passed the CARES act on March 27, which created the Paycheck Protection Program, a $349 billion injection of cash to businesses. The Small Business Administration, working with financial institutions, offered zero interest loans to businesses to prevent a wave of layoffs. If spent on qualifying expenditures like payroll and benefits, the loans could be forgiven and provide a lifeline to businesses impacted by early virus containment measures.

It took just 13 days from the first day of applications for the program to run out of funding. For Garland and Brandy Ledbetter, co-owners of King’s Peak Coffee in Poplar Grove, the process was frustrating. King’s Peak closed on March 16 and didn’t receive funding during the first round. Ultimately, it wasn’t the bank where the Ledbetter’s do business, nor their personal bank, that came through. It was their payroll company, Square.

“Our business account bank was not taking any more applications,”said Brandy.“Our personal bank never responded to our application. Paypal denied our application because we are a new company with limited credit history. Finally, Square, who handles our point of sale and payroll, reached out to us and they did it quickly and efficiently.”

When Congress approved additional funding, King’s Peak was able to secure a loan. Despite initial challenges, the program remains popular. “It was frustrating to hit a wall the first few tries, but Square actually made it feel easy and we ended up being very happy with it after that,” said Brandy.

As a result of programs like the Paycheck Protection Program, some local workers have been able to keep their jobs. Owen Geary, head mechanic at the nonprofit Salt Lake City Bicycle Collective, explained that after securing relief during the first round, the Collective stayed open by taking special measures to ensure the safety of customers and employees. “We have appointments, so we limit the number of people in our shop to typically one to two people,” said Geary. “Anyone who’s not an essential part of what we do works from home…we’ve found other work for them to do within our organization, so we can keep them employed.”

Despite his challenges, Geary recognizes that his experience is more positive than those of other workers. “...[it would] be hard for me to say that I’m not privileged. I have a job and I’m grateful for that, and I get to work for a nonprofit and help people. Those are all things I have in my life that are pretty awesome.”

For others, like Jennifer of Rose Park, (whom we’re using a pseudonym for because she asked not to be named), their financial security evaporated as the coronavirus began spreading in Utah. After cases spiked in early March, she had to get creative and work overtime just to stay afloat.

Originally, she was driving for Lyft and working at a tattoo parlor. Once stay-at-home orders went into effect, she said of the tattoo parlor, “we immediately shut down.” She stopped driving for Lyft because she “was trying to be socially responsible, not putting myself and other people in danger.”

Jennifer lost both her sources of income and was also ineligible for unemployment benefits. “Because I was working under the table, I don’t qualify for unemployment…Officially I wasn’t being paid for it, so I can’t receive the benefits. I checked with my boss to see if he could verify that I was an employee but…he’s not willing to verify with the state that I worked for him.”

She has persevered by starting her own business. “I’ve just had to transition to selling my art full-time. It’s my only resource I’ve had to generate income in a safe way… It’s mostly been reaching out to friends, who have been really supportive by purchasing custom commission pieces.”

The future makes Jennifer anxious. “I was able to receive the $1,200 [individual stimulus payment] and that was a lifesaver, but there’s still a fear of what’s going to happen next month, because depending on freelance work is terrifying.”

Despite the impact that COVID-19 prevention measures have had, Jennifer expresses support for preventing the public health effects of the virus. “...the decision to actually put the stay at home order in was one of the smartest things we could have done. I think that’s been extremely helpful in slowing the spread.”

She also thinks that the government, at any level, should be doing more to protect citizens from the economic fallout. “Putting a hold on mortgages and rent costs during a time when almost no one can work would be the right thing to do.”

Jennifer added that her inability to receive unemployment benefits is not unusual. “I do know quite a few people who have had success in getting their unemployment, but just as many of those are people who haven’t had anything other than that $1,200 injection come through and are playing it day by day, hoping for the best.”

The gravity of the damage to businesses and workers illustrated in data provided by the United States Department of Labor is staggering. Between March 7 and November 7, a staggering 249,516 Utahns filed unemployment claims. During the same period in 2019, 34,293 Utahns filed for unemployment insurance.

The recent spike in cases in Utah and the likelihood that a vaccine is several months away from being widely available means businesses and workers alike have adapted to balance public health and economic considerations.

With future relief funding from Congress uncertain, businesses are relying on support from customers to stay afloat. Brandy Ledbetter from King’s Peak says that support from customers is more important than ever, “Wear a mask so that I can stay open... and remember that most things that [customers] need can be provided by small businesses and that we are truly grateful when [customers] make purchases from us... each purchase, however small, really goes a long way for a small business.”

Turner Bitton is West View Media’s Executive Director.