Small business decimation: California's pandemic scar

A huge sector of the state's economy, small businesses, seems to remain hopelessly stalled. In fact, the decimation of small businesses may be the defining historical economic scar on the Golden State.

SAN FRANCISCO - The addition of 850,000 jobs nationwide, including likely more than 100,000 here in California suggests that the recoveries of the state and nation are accelerating. But, a huge sector of the state's economy, small businesses, seems to remain hopelessly stalled. In fact, the decimation of small businesses may be the defining historical economic scar on the Golden State.

Pre-pandemic, well over 99% of California businesses were small, employing less than 100 people. Nonetheless, small businesses accounted for the employment of almost half of California workers. That was before we lost tens of thousands of small businesses to the pandemic.

The latest numbers are grim according to labor lawyer and Former Employment Development Department Director Mike Bernick.

"Over 40%, actually I think it 40.7%, in terms of small business openings, are down 40% before the pre-pandemic period. That's extraordinary. Just extraordinary. We've never seen anything like this in the previous four or five recoveries," said Mr. Bernick.

According to the Public Policy Institute of California, very small businesses are more likely to be owned by women and non-white Californians. Making matters worse, for small businesses, many people who have jobs, are not returning to their urban offices full time or staying home. So, many small businesses that relied on those employees being at work, and buying things from them, have little or no customers.

Many small Golden State business are simply gone forever.

"And, it hasn't picked up; hasn't picked up even as we reopen. In fact, this week's numbers are worse. They show fewer small businesses are reopening. Than we had in January," said Bernck.

The many newly formed businesses will be different, requiring different skills.

"Already we're beginning to see it; are more internet based. They're not, in terms of brick and mortar, physical locations," said Bernick

For many lesser skilled workers, finding jobs in the new economy might mean further education or looking for work in the ‘gig’ industry.