According to data from Yelp, more than 55 percent of the 132,500 businesses listed on the site that closed during the pandemic will remain shuttered permanently. Although government relief bought some companies time, businesses that are now closed will likely remain that way for the long term. Restaurants account for the greatest share of permanent and temporary closures, followed closely by retailers and then beauty salons and spas.
“Businesses are needing to decide, ‘Do I renew my lease on my space for another year?’ It is really hard to make a one-year commitment to paying rent when businesses are closing down for the second time and there’s no end in sight to this virus,” said Michael Stepner, a postdoctoral researcher at Harvard University. “The longer these temporary closings go on, the more of them will turn permanent.” States that depend heavily on tourism like Hawaii and Nevada have experienced the most closures per capita.
As businesses close across the country, it becomes increasingly difficult for people to find steady work. Another 1.4 million people filed for unemployment for the first time last week, indicating that the economy is a long way from recovery. “This data suggests that economic damage continues to accumulate,” said economist Adam Ozimek. “They were hidden by a wave of workers returning from temporary layoffs in the last two months, but if you look beyond the headline numbers, it’s clear we are not out of the woods yet.”
- How will mass closings of businesses across the country affect the economy as a whole?
- Do you think federal and state governments should provide more relief to struggling small businesses? Why or why not?