THE EFFECT OF COVID-19 ON AFRICAN AMERICAN OWNED BUSINESSES: AN EXPLORATORY STUDY.

• Author: Griffin, Isaiah

INTRODUCTION

CEO and founder of the jewelry company Stella & Do, Jessica DiLullo Herrin once said, "You have to see failure as the beginning and the middle, but never entertain it as an end." This mindset can be applied to anyone looking to pursue entrepreneurship. People are living in a time where health and politics are consistently the most relevant topics on the minds of Americans, but for African Americans, these topics have always been considered when looking to establish their place in society.

For many, these agents are serving as entrepreneurship's greatest deterrent; however, we are seeing many Black Americans continue to emphasize the importance of running their own business, despite the changing world around them. Although health and political elements have always had a disproportionate effect on African Americans, they have always pushed forward with the goal of improving their socioeconomic status.

This study shows how the external factors are altering the American and global economy. Most business owners are beginning to acknowledge the fact that these changes have the power to crash the market, or completely redefine the ways we look at business. This study illustrates the sustainability and volatility of Black businesses, as well as the importance of collective economics when looking to expand companies' reach. Black business owners are realizing that the world will never be the same but are also beginning to recognize that a new outlook is needed to rejuvenate their economic success. Who Will Wake From The American Dream? The State of Black Businesses Through the Lens of a Changing World will give a vivid illustration of how sensitive the American economy is to external forces and how these factors affect American Black Businesses.

LITERATURE REVIEW

One of the articles that supports the claims made in Who Will Wake from The American Dream? The status of Black Businesses Through the Lens of a Changing World, was Robert W Fairlie's the Impact of Coved-19 on Small Business Owner: Evidence of Early-Stage Losses from the April 2020 Current Population Survey. The article analyzes many small businesses are likely to close, but there is no early indication of how this will affect the economy. It is the first to examine the effects of the pandemic on the number of active small businesses in the United States, using nationally representative data from the April 2020 CPS, which is the first month to fully capture early pandemic effects.

From April 2020 CPS microdata, this report offers the first projections of COVID-19's early-stage impact on small business owners. Instead of COVID-19 mandates and market changes, the number of employed business owners fell from 15.0 million in February 2020 to 11.7 million in April 2020 (Fairlie, 2020). The article also analyzed the data patterns across gender, race and immigrant business owners. Finding showed that African Americans lost 41% of their businesses, experiencing the largest loss amongst any group.

Most major industries faced large drops in the number of business owners, with the only exception being agriculture. Construction, restaurants, hotels and transportation all faced large declines in the number of business owners due to COVID-19. In his results, Fairlie wrote about how the number of small business owners have dropped and showed their direct correlations. From February to April 2020, the disappearance of 3.3 million business owners (or 22 percent) was the highest on record. The losses are much greater by conditioning on doing two days a week. In February 2020, 13.6 million business owners worked 15+ hours, compared to just 9.8 million in April 2020.

Fairlie (2020) also analyzed demographic patterns in relation to the loss of small businesses. In terms of ethnic trends, Figure 4 depicts the ownership of businesses by racial groups. According to the results, the number of African American business owners fell from 1.1 million in February 2020 to 640,000 in April of this year. It's concerning that 440,000 Black business owners were forced to close their doors permanently, representing 41% of the previous level (Nicolaci da Costa,2020).

Fairlie (2020) identified the industry patterns that occurred as a direct effect of COVID-19. Almost every sector saw a significant reduction in the number of company owners. Agriculture was the only sector where the number of company owners has grown since February 2020. In the United States, approximately 670,000 company owners lost their jobs in construction. Even though construction companies face a lot of market fluctuations, it's unclear how many of these company owners will be able to return. COVID-19-mandated regulations also forced the closure of storefronts around the country. Retail trading fell by 108,000 company owners in February 2020, marking a 10% drop. Fairlie also spoke of the importance of industry distribution and diversity.

From February 2020 to March 2020, the number of female business owners fell by 25%. Part of the reason for the comparatively high company losses from February to April was the market spread of female business owners. When looking at the national sector distribution in the United States, the drop in company owners is smaller, at 19%. The number of Black company owners in critical sectors is 66 percent, which is smaller than the national average of 76 percent and associated with the less "favorable" market distribution, putting them at greater risk of COVID-19 losses. Female-owned companies are even less concentrated in important businesses (61%) than male-owned businesses.

In Fairlie's (2020) study, titled "The Impact of COVID-19 on Small Business Owners: Continued Losses and the Partial Rebound in May 2020 ", he provided data on the demographic impact of COVID-19. This study was a continuation of the findings made in a previous paper. In Fairlie's (2020) study "The Impact of Coved-19 on Small Business Owner: Evidence of Early-Stage Losses from the April 2020 Current Population Survey, the author made projections on how the economy would respond to COVID-19 in the preceding months; this study provided the actual data and he compared the two in this study.

Fairlie examined the proportion of each demographic population employed in "key" sectors is another way to quantify market impacts. As previously said, the classification is not optimal, and other considerations such as consumer demand, regulation, and compliance by companies all play a role in whether they are open. From nationally representative April 2020 Current Population Survey results, the first projections of COVID-19's impact on the number of business owners show dramatic early-stage declines in small business activity. Over the critical two-month span from February to April 2020, the number of involved company owners in the United States fell from 15.0 million to 11.7 million.

No other one-, two-, or even 12-month span has ever seen such a significant shift in economic operation. In contrast, the number of 9 company owners fell by 730,000 from the outset of the conclusion of the Great Recession, a mere 5% decline. This paper also assessed the question of "whether the shutdowns of small businesses are temporary or longer term." Several federal policies have been implemented in response to complaints...