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SHOP SMALL
GETS SMALLER IN ILLINOIS, WITH 11,200 FEWER SHOP OWNERS
Illinois Policy Institute/
Bryce Hill
After
Black Friday comes Small Business Saturday, when Americans are
encouraged to support their local retailers. But there will be over
11,200 fewer Illinoisans running retail stores on Nov. 28, thanks to
COVID-19 and state-mandated lockdowns. |
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 And
when it is time to take a shopping break to eat and drink, there will be nearly
17,600 fewer Illinois bar and restaurant owners to serve you.
Small Business Saturday this year will see 61% of the retail
businesses shuttered compared to last year. The carnage has been even worse for
bar and food service owners, where 71% are out of the business.
While it is still too early to tell how many of these closures will be
permanent, the reinstatement of Tier 3 mitigation protocols Nov. 20 that limit
economic activity without substantial government relief of any form make
permanent business closures more likely.
It isn’t just business owners who are hurting this holiday
season. Illinois’ job counts remain down more than 415,000 relative to
pre-pandemic levels. For the accommodation and food services sector, employment
is down 108,600 compared to February. In the retail trade sector, employment is
down 13,900 compared to February.
Although it may appear that retail workers are not hurting
quite as much as business owners in the sector or workers in other areas of the
economy, this is likely because many large businesses in the sector somewhat
benefitted from the pandemic. Grocery stores, home improvement stores and large
online retailers such as Amazon have all seen increases in hiring in recent
months.
While increases in employment in any area of the economy are positive signs,
these trends reveal the disproportionate impact of COVID-19 and state-mandated
lockdowns on small businesses. Making matters even worse, Illinois has
experienced two consecutive months of payroll declines, even as the rest of the
nation continues its recovery, and more than 100,000 Illinoisans gave up on
their job search altogether last month.
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Many of the industries that remain the most
affected are industries that will be most tightly restricted under
the Tier 3 mitigation measures. New mitigation efforts include
restrictions on bars and restaurants that close their indoor
facilities and occupancy limits on health and fitness centers,
hotels, recreational services and manufacturing businesses. Rising
cases of COVID-19 and increased restrictions on economic activity
will likely result in further job losses and business closures, as
was the case under similar circumstances in the spring.
As Illinois enters the holiday season, it is
worthwhile recognizing the disproportionate impact the economic
downturn has had on boutique businesses. Small business owners take
risks to start their own business, provide jobs and enrich their
communities, but the rewards of the holidays have evaporated for
many of them.
Gov. J.B. Pritzker is continuing to pursue new forms of tax revenue
with the potential to do further damage to small businesses, even
after voters soundly rejected his progressive income tax hike Nov.
3. The governor has suggested he may now be in favor of raising the
state’s flat income tax or closing “loopholes” to raise more
revenue, though exactly which loopholes he is referring to remains
unknown.
Economists argue against raising taxes during a recession, so
lawmakers now must reject Pritzker’s call for a 20% income tax hike
on everyone.
Instead, Illinois can improve its fiscal situation
and continue to provide core services mainly by implementing
constitutional pension reform. There is also the additional
possibility of the state receiving federal aid by reforming state
finances, if congress adopts the Taxpayer Protection Act.
If Illinois imposes higher taxes on struggling businesses and
individuals, it is unlikely it will ever be enough to fix the
state’s broken spending system. It could even be enough to make the
2021 Small Business Saturday even smaller.
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