Welcome to the Small Business Rundown. Each day, we bring you stories that impact small business owners and their workforce.
Small Business News Highlights for August 7:
- Small business revenue dropped by 52% since start of pandemic
- Jobs report reflects last of the “easy” economic gains
- What would a payroll tax cut by executive order mean for ordinary workers?
Small business revenue drops more than half
“I’m not concerned about up or down with revenue. I’m concerned about broke or not broke.”
A new study found that small businesses saw a 52% drop in revenue since this time last year. Likewise, payroll expenses also saw a more than 50% decline and have been close already for some amount of time this year.
The study was released after another week of over a million new jobless claims and as the Paycheck Protection Program is about to expire without any replacement program in place.
Jobs report reflects last of the “easy” economic gains
“It’s great to see progress, but the speed of progress has slowed down and we’re still far from any sort of healthy labor market right now.”
The U.S. Department of Labor July jobs report was released today and economists believe that the third straight month of economic gains may be the last for a while.
At this point, only about 42% of jobs lost during the pandemic have been recovered, and the overall unemployment rate is still 3 times higher than it was at the start of the pandemic. Without a viable vaccine, immediate and large-scale job creation is unlikely and the expiration of expanded unemployment benefits, with no remedy in sight, will drastically cut down on consumer spending.
Payroll tax cut wouldn’t benefit workers
“The EO would take the negative aspects of a payroll tax cut and exacerbate them: businesses would be unlikely to increase hiring or investment, workers wouldn’t see greater take-home pay & the unemployed would still not see a cent.”
President Trump has pushed for a payroll tax holiday as a means of stimulating the economy. Now, as Republican and Democratic lawmakers fail to move forward any sort of legislative plan, the White House has vowed to take executive action.
Aside from the overall question of legality, what would a White House-ordered payroll tax freeze mean for workers? Unfortunately, say economists, not much, as companies would only be suspending payments and instead of foregoing them all together. Since they would still be required to pay their portion, businesses save the money.
Republican lawmakers did not include payroll tax cuts in their legislative package.