Many Small U.S. Businesses Can't Afford to Pay Quarantined Employees a Full Month



​Half of small U.S. businesses who have employees under quarantine can't afford to pay their employees for a full month, according to new research the Society for Human Resource Management (SHRM) released today. More than half of small business owners in the U.S. expect revenue losses of 10 percent to 30 percent.

SHRM conducted three surveys between March 12 and March 18 and received responses from 518 SHRM members in the U.S., 507 small U.S. business owners, and 492 U.S. workers. All respondents worked at businesses with 1 to 100 employees.

Almost half of all service and small businesses that involve physical work, such as construction, said they are unable to conduct any of their operations remotely. As of March 31, 32 states have issued stay-at-home orders to prevent the spread of the coronavirus, but one in five small businesses can afford to pay employees for only one week or less if their city or town issues a quarantine, SHRM found. 

The quarantine is expected to have a dire impact: 58 percent of U.S. workers say that in less than a month they won't be able to meet their basic financial needs. Workers across the spectrum of industries—those in physical jobs, the service industry, such as healthcare and retail; and the knowledge economy, such as banking and administrative support—will be hardest hit, according to SHRM.  

Some relief is available under the just-passed Coronavirus Aid, Relief and Economic Security (CARES) Act: Through it, the U.S. Small Business Administration (SBA) will manage payroll-protection loans for qualifying organizations with fewer than 500 employees.

Some cities are stepping forward to offer help to small business owners. New York City will offer interest-free loans of up to $75,000 to businesses with fewer than 100 employees, if the business can demonstrate sales decreases of 25 percent or more related to the outbreak, according to Crain's New York.

[SHRM members-only toolkit: Managing Through Emergency and Disaster]

"Headlines have highlighted the pandemic's impact on Wall Street, but the bigger story might be the economic shockwaves hitting the businesses and workers on Main Street," said Johnny C. Taylor, Jr., SHRM-SCP, SHRM president and CEO. "This new data underscores this pandemic is, in many ways, more challenging than the 2008 financial crisis."

Many Americans, he noted, are living very close to paycheck to paycheck and "it's creating a level of stress that cannot be overstated."

Employees are saying they are more concerned about what this means for their family and for them financially than they are of getting COVID-19, he said during a conference call on Tuesday. 

More than 99 percent of the nation's 28.7 million firms are small businesses—companies with 1 to 499 employees—and 88 percent have fewer than 20 employees, according to JP Morgan Chase. 

Nearly a quarter of small businesses have not discussed any preparedness measures for dealing with the pandemic. Some small business owners, though, are finding ways to help their employees during this time. 

These are the top five preparedness measures that SHRM found small business owners are taking:

• 90 percent are encouraging sick employees to take time off. One-third of small businesses, though, offer no paid leave. Some employers will be required to provide paid sick leave during the pandemic; there are exceptions for some small employers.
• 83 percent provide employees with health tips and information related to the virus.
• 73 percent provide health products such as masks and hand sanitizers to limit transmission of the virus.
  
• 62 percent require employees to use health products to limit transmission.
  
• 62 percent are restricting employee travel. 
  

At the time these surveys were conducted, there were no mandatory stay-at-home restrictions. California became the first on March 19, a SHRM researcher noted. President Trump issued guidelines March 16 for slowing the spread of the coronavirus over the next 15 days. Those guidelines included not participating in social gatherings of more than 10 people or visiting bars, restaurants and food courts. On March 29, Trump extended the advisory for people to practice social distancing until the end of April.