As our country reflects on a year defined by a once-in-a-century global pandemic, it is deeply distressing to consider the economic wreckage caused by the coronavirus.
The United States is still down roughly 8.5 million jobs, and Federal Reserve Chairman Jerome Powell recently acknowledged that the real unemployment rate is likely close to 10%.
Nationwide, “the jobs recovery is only about 60% done” as “more than 4 million Americans have now been looking for work for more than six months.” And between February 2020 and February 2021, our home states of North Dakota and Georgia suffered job losses of 6.5% and 4.6%, as well as a 3.5% and 2.5% loss in GDP, respectively.
But despite the dark depths of the worst economic collapse in nearly 100 years, the remarkable degree of determination embodied by people across this country throughout the course of the past year serves as a shining source of hope. Per data released in March by Yelp, “almost half a million new businesses opened in the U.S. in the first year of the pandemic,” — 60% of which were in the professional, local, home and auto sectors. What a testament to the resilience and resolve of the American entrepreneur, whose already unparalleled grit has only been tempered by such a grueling economic climate.
The data — which dovetail rather seamlessly with a U.S. Census Bureau report on how “a record number of new businesses were created in 2020” — also highlight how “the restrictions brought on by the pandemic accelerated the need for businesses to adapt by using technology and changing the ways they interact with their customers.”
As Yelp’s data scientist subsequently notes, “it’s been incredibly impressive and encouraging to see how much local businesses, both in large cities and smaller towns, have embraced technology to serve customers during this challenging time.”
We agree. And it is worth noting that the economic success stories of the pandemic have been fostered in large part by our tech sector and the innovative spirit of American entrepreneurs.
Prior to the pandemic, digital tools certainly helped empower the success of small businesses. Back in 2018, for instance, a U.S. Chamber of Commerce study found that “84% of small enterprises [used] at least one major digital platform to provide information to customers,” while “75% [used] tech platforms for sales.”
But during the pandemic’s bleakest months, those same tools helped ensure the survival of small businesses. It only took until May 2020 — roughly two months into the pandemic — for nearly one-third of small business owners to report that “without digital technology, they would have been forced to close all or part of their businesses.”
And overall, a full 76% of American small businesses say they are relying more on digital tools during the COVID-19 crisis to connect with existing customers, advertise to find new ones, adapt service offerings, and sell products through online platforms.
Digital tools like social networks, therefore, aren’t just about keeping friends and families connected during social distancing — they’re keeping small businesses’ ‘doors’ open.
These small businesses were vital to the states we represented in the Senate — and will be similarly indispensable to our country’s economic success in the aftermath of this crisis.
Our ability to keep them afloat through innovation is particularly important as 9 million of them worry they won’t survive past the pandemic — and 8 in 10 minority-owned businesses say “their company is in poor financial condition … even after receiving limited help from Paycheck Protection Program (PPP) loans and other small business relief efforts during the pandemic.”
Meanwhile, new venture capital data similarly showcases the value of America’s vibrant tech sector to startups. A recent Wall Street Journal report on Silicon Valley’s influence says, “deal flow and valuations are reaching new heights in technology startups, as a flood of cheap cash fuels efforts to find the industry’s next big winners, from software to social media. … Startups are raising cash every few months rather than every couple of years.”
According to PitchBook/NVCA, the $57.0 billion invested in Q1 of this year is the highest quarterly amount on record. Overall, as KPMG concludes in its look at 2021’s surging VC investment, the pandemic forced both businesses and consumers to adapt to the circumstances and innovate digitally in ways that were not previously commonplace.
Accordingly, we urge our former colleagues in Congress to legislate with this new digital landscape in mind. While multiple major stimulus packages have done much to keep our economy going, Washington can and must work together on a bipartisan basis to pair those efforts with policies that protect innovators. And the American people agree; per a recent poll, “nearly nine-in-ten voters believe American tech companies have played an important role in helping the economy during the pandemic,” while five-in-six believe “we must do more to make sure American companies remain competitive.”
The severity of the foregoing economic challenges — and the great significance of the small business sector — only underscores the urgency of swiftly doing so.
• Former U.S. Sens. Saxby Chambliss, Georgia Republican, and Kent Conrad, North Dakota Democrat, are co-chairs of the American Edge Project’s Economic Advisory Board.