We can be hopeful that the coronavirus vaccine will make us able to put the pandemic behind us in 2021. Unfortunately, there is no vaccine for the economy.
Maine lost far more jobs last spring than were lost in any recession in the last 50 years, according to a study by the state Department of Labor. Even after a robust period of growth in the summer and fall, we have regained only about half of the jobs that were lost.
As of November, the total number of nonfarm jobs in Maine was 8 percent fewer than in beginning of the year. Even in the depths of the Great Recession, the number of jobs lost was only 5 percent less than the previous year, and it took nine years to replace them.
Along with distributing the coronavirus vaccine, getting more people back to work should be the No. 1 job for the Legislature and Mills administration, and they should be paying special attention to locally owned small businesses, which employ more than half of the state’s workforce.
These also include the businesses that have been hit the hardest by the COVID recession, especially in the retail and hospitality sectors. Some of those jobs have been lost temporarily and will return when customers feel safe to go back to traveling and eating in restaurants. But we don’t know how many of these businesses are going to survive this extended public health emergency. If we don’t want to wait until 2029 to recover the lost jobs, the state will need to be smart about how to stimulate job growth.
The job picture in Maine closely mirrors the national recession, which has been described as the “most unequal recession in modern U.S. history.” It delivered a glancing blow to the people at the top of the income scale and a Great Depression-like blast to those at the bottom. This is clearly illustrated by the stock market, which recovered from a severe drop last spring but has recovered to the record-breaking levels of 2019, while millions of Americans are still unemployed.
Small-business growth is the best way forward and the most dynamic job creators are new businesses. The term “startup” has become synonymous with high-tech companies, but it should also include restaurants, shops, landscaping, taxi services and any other business that hires at least one employee.
Starting a business is also a time-worn path into the middle class for people escaping poverty, especially racial minorities and immigrants, who start businesses at higher rates than the general population. Fostering a wave of new startups would benefit the very people who have been hit the hardest by this recession.
What would that take? Access to capital is one hurdle for any new business. For entrepreneurs who don’t have extensive savings or collateral, a little seed money can go a long way.
There are other policies that may not seem directly connected, but would make it easier for people to start a business. They include affordable health care and relief from student debt load, that limits the ability of many working-class people to borrow.
On the federal level, more aggressive antitrust enforcement would give small businesses a fighting chance against competition from corporate giants, and so would changing tax policy that allows local-retail-eating monster like Amazon to owe no federal income taxes on billions of dollars in profit.
The end of the pandemic is in sight. If we want the economy to recover as quickly, small-business growth should be a top priority.
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