Riley Maszk | December 2021
Never before have we seen such a dynamic shift in normalcy until the global pandemic of the COVID-19 virus. With the hardships in losing our loved ones, facing disconnect with political disagreement, and using action as a means of representing frustration, our economy and its businesses were at risk for the unprecedented future that lay ahead. From analyzing the spectrum of businesses, and the current economic climate, I found a great divide in the effects of the pandemic-posed environment. After this further analysis and research of the problems different businesses faced it made things very clear: we need to help small businesses. As the backbone of our world, small businesses allow for the integration of new ideas and greater production.
No matter what is happening in the world, people are still going through life-changing events whether this is marriage, having a child, or graduating from college. With these events comes the possibility of buying a home. I had the privilege to speak with a realtor manager from Shorewest Realtors to gain more understanding of the real estate market and the overall economic effects on the business due to the pandemic. Overall, this realtor exceeded its expectations from having around $60 million sold in real estate in the year 2019-2020 to having around $53 million sold in the start of 2021 to July. During the pandemic, 5.64 million existing homes were sold in 2020[I] and home sales skyrocketed to 7.1 million homes in the year 2021[II]. The success of Shorewest Realtors is a small sample of the economic boom this market faced while dealing with exceeding challenges. In terms of the challenges this company had faced, it essentially was presented as minimal; this was mainly due to the fact that selling a house virtually didn’t give as much of a “wow effect” as it does in person. One idea in connection to this that really paints a picture about the success of this industry as a whole is that real estate companies aren’t there to just sell homes: realtors are there to have recognition of homes and help people manage stress. Without being able to sell these homes physically with the client, the stress of purchasing the house in a certain neighborhood rises which could end up making the purchase forced which can be a struggle.
After analyzing such a strong market that did not seem to be troubled by the overall conditions of the world, I then examined the market for chain establishments. Whether this is the famous fast-food restaurant McDonald’s or even an upscale restaurant like Belair I wanted to gain perspective from the differences in these two markets and whether the pandemic struck influence to the success or failure of these retail businesses. In terms of any retail food and drink establishment, the sales numbers in 2020 were around $659 billion which was $240 billion below prediction before the pandemic [III]. The new anticipated numbers for 2021 are predicted to have double-digit growth with around a total of $731.5 billion. With the government implementing the CARES Act, policies like the Coronavirus Relief Fund and the expansion of Unemployment Insurance will attempt to provide for those who were unlucky and unfortunate enough to lose their jobs and source of income. According to the Center on Budget and Policy Priorities, this will provide, “…a $600 per week, federally funded benefit increase through July 31 for recipients of PUA or regular UI” [IIII]. This will help workers and families stay afloat from the downward economic environment and the trends from the pandemic.
After gathering this information and analysis of an increasing trend of economic effects on these businesses I was finally left with the sector hit the hardest: local and family-run establishments. In my hometown of Whitefish Bay, Wisconsin I was a witness to many local businesses being shut down due to an inability to pay rent, employees, bills, etc. It was a shame to see so many businesses that were a part of my childhood be brought down because of the unfortunate state of our world. Whether it was a 70-year-old movie theater, or a 28-year-old coffee shop it was unfortunate to see that businesses run by a driven community were not able to stay afloat. The pandemic permanently closed around 130,000 local establishments, roughly two-thirds of the total amount [V]. To operate a small business, it takes a lot of startup physical and human capital, especially when it is either newly established or has not gained enough attraction. The pandemic left most of these businesses destitute as a result of the restrictions imposed during the pandemic. In comparison to the real estate market and the retail market, local and smaller businesses faced the most economic hardship during the pandemic.
As we fall into another era of the pandemic with the delta variant, the steps to take are set in stone from the process of trial and error our world’s governments have gone through. A recent study showed that 41.3% of businesses reported that they were temporarily closed because of COVID-19 with 1.8% permanent closing. The pandemic posed a great threat to businesses on an overall level; however, from statistical analysis the small businesses and local establishments were impacted the greatest with a high percent having to shut down for long periods of time and even close the business permanently. Companies like Amazon and Microsoft were built upon the same principles as other small businesses and eventually were able to find their success. With the limitations and constant transitions, smaller businesses have had a tougher time reacting and responding to the changing global environment.
References
[I] “Quick Real Estate Statistics.” Www.nar.realtor, 2020, www.nar.realtor/research-and-statistics/quick-real-estate-statistics.
[II] “U.S. Home Sales 2021 | Statista.” Statista, Statista, 2021, www.statista.com/statistics/275156/total-home-sales-in-the-united-states-from-2009/.
[III] “U.S. Restaurant Industry Finished the Year $240 Billion below Pre-Pandemic Sales Estimates.” Forbes, 26 Jan. 2021, www.forbes.com/sites/aliciakelso/2021/01/26/the-us-restaurant-industry-finished-the-year-240-billion-below-pre-pandemic-sales-estimates/?sh=417ca2884ebf.
[IIII] “Advance Child Tax Credit and Economic Impact Payments – Stimulus Checks | USAGov.” Usa.gov, 2020, www.usa.gov/covid-stimulus-checks.
[V] Simon, Ruth. “Covid-19’S Toll on U.S. Business? 200,000 Extra Closures in Pandemic’s First Year.” WSJ, The Wall Street Journal, 16 Apr. 2021, www.wsj.com/articles/covid-19s-toll-on-u-s-business-200-000-extra-closures-in-pandemics-first-year-11618580619.