Small Businesses and Workers Need Help From the State—And Each Other

Marc Stier |

Thanks to the American Rescue Plan enacted by President Biden, we’re seeing the economy recover faster than people suspected was possible when we were in the depths of the pandemic recession nine months ago.

But that recovery doesn’t include everyone. Small businesses and many working people are still hurting. They need Pennsylvania’s government to help them by using the 7.5 million dollars of our tax money the General Assembly refused to spend in June.

Fifteen months after the beginning of the pandemic, small business revenue in Pennsylvania is still down 28% relative to pre-COVID levels. It has continued to decline in the last two months.

As of June 21st, the number of small businesses open in Pennsylvania was below that at the start of 2020 by about 37%. The last two months have seen a decline of roughly 10 percentage points.

Many workers remain in trouble, too. As of May 2021, there are 400,000 fewer jobs in the state than there were in February 2020.

The unemployment rate has remained around 7% for the past nine months, two to three percentage points higher than before COVID. And the rate is even higher in rural communities and inner cities. Meanwhile, as of last week, job postings are still 18% short of pre-pandemic levels.

The federal government has done its part, but now we need the state to step up.

Pennsylvania had $10 billion in American Rescue Plan and state surpluses that could be used to help Pennsylvanians who are hurting from the pandemic and the inequality it deepened. And yet, the Republican-led General Assembly put $7 billion of our tax money in their bank account.

They need to come back to Harrisburg now and spend the money necessary to ensure that the current economic recovery includes everyone.

The failure of the Republican-written budget to help restaurants, entertainment venues, and small shops of all kinds is utterly hypocritical. For most of a year, the Republican leadership of the General Assembly attacked Governor Wolf’s emergency orders on the ground that the orders hurt small businesses—even though the real cause of distress was the pandemic itself. Yet they left Harrisburg for their summer vacation without lifting a finger for small businesses and for working people.

Helping working people and helping businesses go together.

Providing support for small businesses creates jobs. Providing support for working people—and ensuring that wages are high—enables them to buy more from local businesses. Business lobbyists, who mostly represent the largest American corporations, keep complaining about wages going up. But most local businesses understand that consumption accounts for the overwhelming majority—70%—of business activity and that high wages are necessary to drive our local economy forward.

They learned from Henry Ford’s decision to pay his workers more so that they could afford to buy the cars he produced. They understand that the middle class in America was at its largest when wages were rising quickly. And they don’t trust the large corporations who want to drive wages in America down to the levels of third-world countries.

The Republicans who lead the General Assembly in Pennsylvania need to start working for the workers and small businesses in their local communities, not the giant corporations that give them campaign contributions. At a minimum, they need to use part of the $7.5 billion in ARP funds and state surpluses to spend

  • $500 million in relief funds for the small local businesses still suffering from the effects of the pandemic.
  • $500 million to provide grants to offset state and local taxes on low-income workers who currently pay at twice the rate of the 1% and who contribute far more than the 74% of the largest corporations which pay no taxes at all.
  • $400 million on hazard pay to the low-income frontline workers who risked their lives to keep our economy going.
  • $300 million to improve access to childcare which would help more workers return to their jobs.
  • $200 million to improve broadband access that would help connect small businesses in urban and rural areas to their customers.

And they could do what this country did during the Great Depression and help working people and small businesses without spending any money—they could gradually raise the minimum wage to $15 per hour, increasing wages for a quarter of Pennsylvanians and putting $6 billion in new spending into local economies.

Thanks to President Biden, the state can provide critical help to ensure that everyone can take part in our economic recovery without raising taxes.

The time to act is now.