How Asian-owned businesses are weathering the pandemic
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There’s more evidence that this pandemic is not affecting all businesses equally.
A new report from the JPMorgan Chase Institute found that while Black-owned businesses are facing the biggest drops in cash reserves due to the COVID-19 pandemic, Asian-owned businesses are close behind, with cash balances down 22% in April and revenue down more than 60%.
“Asian-owned businesses — their cash balances were also down more than 20%,” said Chi Mac, the small business research lead at the JPMorgan Chase Institute. “That’s certainly a much steeper decline than what we see across all small businesses.”
Not all communities track business ownership by race, so this analysis is limited to a few states. But it matches up with what Robert Fairlie, professor of economics at the University of California, Santa Cruz, is finding in his research — especially earlier in the pandemic.
“I found, for example, in April that 26% of Asian-owned businesses shut down during that month,” Fairlie said. “I also looked at this in May and found that 21% were also closed.”
For business owners overall, the drop was 15%. Some of that was just general business conditions when the pandemic hit. Khoa Le owns Kvibe Studios in New Jersey.
“Boom — I lost all my corporate contracts. Within about a two-week span, I lost close to over half a million dollars,” Le said.
But he acknowledges that in the early days, racism played a role for some Asian-owned businesses as well.
“My wife owns a nail salon, so when the salons were still open, people will go into the salon and say, ‘Hey, are you Chinese? Because if you are, I’m not gonna do business,’ ” Le said.
Now that nail salons are open again, he said people are lining up to get into his wife’s shop. And Le has pivoted to more virtual video sessions and said his corporate clients are starting to come back.
COVID-19 Economy FAQs
Will the federal government extend the extra COVID-19 unemployment benefits?
It’s still unclear. Congress and President Donald Trump are deciding whether to extend the extra $600 a week in unemployment benefits workers are getting because of the pandemic. Labor Secretary Eugene Scalia believes the program should not be extended, and White House economic adviser Larry Kudlow said the additional money is disincentivizing some workers from returning to their jobs. Democrats want to keep providing the money until January.
As states lift restrictions, are people going back to stores and restaurants?
States have relaxed their restrictions, and many of us have relaxed, too. Some people have started to make exceptions for visiting restaurants, if only for outdoor dining. Some are only going to places they trust are being extra cautious. But no one we’ve talked to has really gone back to normal. People just aren’t quite there yet.
Will surges in COVID-19 cases mean a return to lockdowns?
In many areas where businesses are reopening, cases of COVID-19 are trending upwards, causing some to ask if the lockdowns were lifted too soon, and if residents and businesses might have to go through it all again. So, how likely is another lockdown, of some sort? The answer depends on who you ask. Many local officials are now bullish about keeping businesses open to salvage their economies. Health experts, though, are concerned.
You can find answers to more questions here.
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