Covering COVID-19 is a daily Poynter briefing of story ideas about the coronavirus and other timely topics for journalists, written by senior faculty Al Tompkins. Sign up here to have it delivered to your inbox every weekday morning.
We do not fully understand why so many new businesses started up during the pandemic but it seems that after the federal government sent out each stimulus check, states noticed a surge in business licenses.
The National Bureau of Economic Research’s new study — which looked at business records from Georgia, Kentucky, New York, Tennessee, Texas, Vermont and Washington for all of 2020 and the first part of 2021, and Florida for all of 2020 only — says one particularly interesting thing happened: Black-owned businesses in above average income neighborhoods sprang up faster than other businesses.
Areas including a higher proportion of Black residents, and more specifically higher median income Black neighborhoods, are associated with higher growth in startup formation rates between 2019 and 2020. Moreover, these dynamics are reflected in the passage of the major Federal relief packages. Even though legislation such as the CARES Act did not directly support new business formation, the passage and implementation of relief packages was followed by a relative increase in start-up formation rates, particularly in neighborhoods with higher median incomes and a higher proportion of Black residents.
The study says one reason for the growth of Black-owned businesses is a 2020 focus to support those businesses. And because of that attention, banks reached out to support Black entrepreneurs in new ways.
Some states saw a lot more new business startups than others. Georgia recorded a more than 57% increase while Washington state experienced only a 6% improvement over 2019.
The New York Times looked at what might have happened to ignite the new business boom:
“The idea that the pandemic has kind of restarted America’s start-up engine is a real thing,” said Scott Stern, an economist at M.I.T. and one of the authors of the research. “Sometimes you need to turn off the car in order to turn it back on.”
The researchers caution that they can’t yet say that the stimulus measures caused the growth in new businesses, but they think that the timing and the rise are so stark that it’s hard to insist that it’s merely coincidence.
The rise in registrations began shortly before the second and third bills were passed, but new entrepreneurs might have started anticipating the result after the first stimulus. “People had already been through this once and had a better understanding of how this would work,” said Catherine Fazio, director of M.B.A. programs at Boston University.
Although there might be other factors at work, the researchers say the stimulus checks and increased unemployment benefits shored up confidence in the economy enough that millions felt comfortable in starting a business despite being uncertain about when the pandemic would end.
This is truly worth your examination on a lot of levels. Who are the new businesses in your area? It would be interesting to track them this year to see how they survive in a pandemic recovery, especially if they formed to specifically address a pandemic-caused problem.
Although most of my readers here are journalists, I would think sales departments would be mining these new businesses as advertising prospects.
Restaurant traffic is way up
Remember when you look at restaurant recovery data, don’t compare this year to last year. You need to drop back a year to find something closer to normal.
Restaurant reservations, including diners who placed themselves on waiting lists, were up 46 percent in April compared with April 2019, according to the review site Yelp (and up 23,000 percent compared with April 2020, when most Americans began staying at home during the pandemic). Yelp’s competitor OpenTable paints a similarly rosy picture.
In some states, restaurant traffic has blown by pre-pandemic levels, prompting industry experts to draw parallels between now and the Roaring ‘20s, which followed the 1918 influenza pandemic, bringing boom times for restaurants and other parts of the hospitality industry.
The post-pandemic death of the office was overstated
A year ago it looked as if we might never go back to workplace offices in anything like pre-pandemic numbers. But now consulting firm KPMG says executives worldwide are more optimistic that we will gather in offices again — just maybe in smaller office spaces than before.
- 17 percent of global executives are looking to downsize their office space as a result of the pandemic. In contrast, 69 percent of CEOs surveyed in August 2020 said they planned to reduce their office space over 3 years, which demonstrates that either office downsizings have taken place or, as the pandemic has drawn on, strategies have changed.
- CEOs are considering what the new reality will look like, but post-COVID, only three in 10 (30 percent) of global executives are considering a hybrid model of working for their staff, where most employees work remotely 2–3 days a week. As a result, only one-fifth (21 percent) of businesses are looking to hire talent that works predominantly remotely, which is a significant shift from last year (73 percent in 2020).
- When employees can safely return to workplaces, one-fifth of companies (21 percent) are looking to institute additional precautionary measures by asking clients and other in-person visitors to inform them of their vaccination status.
Axios notes that the trend in recent years is to shrink individual workspaces in offices. Post-pandemic workplaces may reverse that trend.
The U.S. office building market is over $2 trillion in size, and vacancies have ticked up, while rents have gone down, over the last year. But many companies are now planning their returns to the office, likely with a hybrid model that allows for more social distancing — a trend that will help offset declining demand for office space.
In 1990, offices offered an average of 325 square feet per employee. That declined to 196 feet by 2020, according to commercial real estate company, JLL.
The technical term is “office de-densification.”
Office rents have dropped, but again, not as much as analysts thought they might. Office space in New York City is down about 2.4%, which is a fraction of what experts predicted. Moody’s Analytics estimates office rents nationwide might drop another 7% this year
GlobeSt, which focuses on commercial real estate, summarizes the other forecasts for important sectors including mall space and warehouses. I suspect journalists way overlook what is happening in both areas that are important to the economic vitality of communities:
Moody’s predicts vacancies for neighborhood and community shopping centers will hit a record high of 12.3% this year before declining, with asking rents expected to fall 5.2% for the year and effective rents dropping by 6.8%. Within the retail asset class, regional malls have struggled the most, with vacancies hitting 11.4% in the first quarter.
“Despite general malaise, retail represents an ecology going through a major evolution, and a strong economy bolstered by healthy consumer spending will likely produce winners that can take advantage of market disruptions,” the report says. “Warehouse clubs and large retailers that were successfully able to tailor their omni-channel strategies posted exceptionally strong results throughout 2020 and early 2021. It will be interesting to see how other brick-and-mortar retail operators adapt to the changing landscape.”
Hotels will likely undergo a two-pronged recovery: while occupancies grew in the first quarter to 50.8% (compared to 34.6% and the end of 2020), the average daily rate remains well below pre-pandemic levels. Moody’s analysts suggest the personal travel segment will lead the recovery, while hotels serving business travelers will have a tougher road to recovery.
Dating app says vaxed people get more matches
Dating apps including Tinder, OkCupid, Bumble, Badoo, BLK, Hinge, Chispa, Match and Plenty of Fish all have or are planning to have a feature that allows users to tell those who might be interested that they are vaccinated. And OkCupid says people who say they are vaccinated get 14% more matches. The Hill reports:
Tinder is allowing vaccinated people to get free premium content such as a “Super Like” and is encouraging users to add “Getting Vaxed” or “Vaccines Saves Lives” stickers to their profiles.
OkCupid users who add the “I’m Vaccinated” badge will get a free “boost” to their profile and, starting in early June, users will be able to search for vaccinated users in a system called “Vaccinated Stacks.”
When no landlord will rent to you, extended-stay motels are the last resort
I can think of about 10 extended stay motels that I regularly pass on my weekly errands that once may have been places where people stayed during beach vacations but are now far from family vacation stops. They are now often a last resort for people who fall behind on their rent or mortgage and have nowhere else to go.
The New York Times explored how these extended-stay motels that were never built for extended living are filling the gap for people living without a place to call home. The Times peppered its reporting with lots of individual stories and then pulled back to see how we got to a place where millions of Americans can’t afford a place to live. In part, the is the result of the government pulling out of the public housing business:
Roughly 7.6 million households with low incomes are currently struggling to find a long-term place to live, a housing gap that has been decades in the making. By the mid-1980s, federal and state governments mostly stopped building public housing directly — the thinking was that private investors, lured with tax credits, would build enough affordable housing instead.
The policy largely failed people with extremely low incomes, and over roughly the same period, the available public-housing units declined to 958,000 at the end of 2020 from 1.4 million in 1990, according to HUD.
“It’s the portion of the housing stock declining the most,” says Andrew Aurand, the vice president for research at the National Low Income Housing Coalition.
Lack of supply isn’t the only hurdle for low-income renters. Private landlords can legally reject would-be tenants based on their income, bad credit or previous evictions, and in many places they can freeze them out by requiring steep deposits and two months of rent up front. This makes formal housing, with its yearlong leases, set rates and clear tenancy rights, unavailable to millions.
Journalists, given the foreclosure crisis that I have mentioned again and again in this column, it’s a good time for you to explore what the public housing options are in your town. How long would a person have to wait for public housing if they qualified today?
The Times story also touches on the ancillary issue that rides along with people living in motels:
As more adults have moved into hotels and motels, so have more schoolchildren — 97,640 lived in these settings during the 2018-19 school year, up from 45,781 in 2004-5, according to the National Center for Homeless Education.
I have seen many stories over the years about schools near these extended-stay motels that see a tide of new students or a loss of current students at the start of every new month as people living in the motels move after not being able to make rent and the children change schools over and over. Florida Today called it “invisible homelessness”:
Across the Space Coast and nationwide, there’s an invisible brand of homelessness hiding behind hotel and motel doors.
In many cases, those crowded into these sometimes-dicey accommodations are couples or families with at least one member carrying a recent eviction, criminal and/or credit woes that make them undesirable tenants elsewhere.
Even if they’re working, they are often unable save for first and last month’s rent plus a security deposit for an apartment. Desperate to keep a roof over their head, they turn to hotels which will rent on a daily, weekly or monthly basis.
Whatever situation put them on the street, getting off it means they end up spending more on hotel rates than they’d pay for a home rental. That in turn prevents them from saving money for move-in costs.
Unless they get help from the government or a charity, they are stuck in that hard-to-break cycle. And life at a hotel can come with myriad challenges, for both the tenants and property managers.
Some of the most cited work around this topic includes this 2015 Los Angeles Times project and an HBO documentary called “Homeless: The Motel Kids of Orange County.” The Los Angeles Times produced a video project in 2019 and it reminded me of a Scott Pelley story for “60 Minutes” about kids living in cars who got a break and moved into a motel room.
Without enough corrections officers, cooks and nurses guard federal prisoners
Since the pandemic began, prisons and jails have had some of the worst COVID-19 outbreaks in America and have understandably had a hard time retaining and recruiting people to work.
Just how bad is the employment situation? The Associated Press reports that federal prisons alone have 6,000 open jobs nationwide.
The shortage of corrections officers means that in some prisons, there is not enough supervision to allow people out of their cells to exercise. Cooks, teachers and nurses have been moved into guard positions. The AP reports:
For years, the Bureau of Prisons has been plagued by systematic failures, from chronic violence to high-profile deaths. But the staffing crisis is reaching a breaking point, and the pandemic hasn’t helped. Nearly 7,000 employees were sickened with COVID-19. Officers were sent to hospitals to guard inmates being treated for the virus. Four staff members and 235 inmates died.
Overworked employees are burning out quickly and violent encounters are being reported on a near-daily basis. At a prison in Illinois, there are so few staff that officers are sometimes forced to work 60 hours of overtime in a week. At a facility in California, a fight broke out among inmates soon after a teacher was sent to fill in as an officer.
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