BPC, in conjunction with Morning Consult, conducted a poll of more than 500 business owners and executives who have between two and 500 employees to understand the challenges small businesses are facing during COVID-19, how they are managing their workforce, and the impact that new federal policies, such as emergency paid sick and paid family leave, have on their business.
A new survey by the Bipartisan Policy Center and Morning Consult surveying small business executives between two and 500 employees to understand how they are managing their workforce during COVID-19, finds that family and child care responsibilities due to school closures is a primary issue for small business owners.
It also shows that small businesses are split on whether the new federal emergency paid sick leave and paid family leave programs enacted in the Families First Coronavirus Response Act (FFCRA) either helped or hurt their business. However, a strong plurality of smaller-to-mid-size employers (21-500 employees) say the Act helps their business.
Prior to the current crisis, 81 percent of workers did not have access to a defined paid family leave benefit and 24 percent of workers lacked a single day of paid sick leave. This gap in paid leave access in the face of a growing pandemic demonstrated that paid sick leave is a public health measure.
Recent research shows that states experience 11% percent fewer flu cases within a year of enacting employee access to paid sick leave. And as social distancing mandates shifted the nation into remote work, shuttered businesses, closed schools, and child care facilities, people across the country are quickly realizing how critical paid family leave is to the health and welfare of both employers and employees.
With broad bipartisan support, the FFCRA attempted to address these needs in near term, but even the new provisions leave somewhere between 6.8 million and 19.6 million private-sector workers without paid sick or paid family leave as a result of exemptions. Many frontline and essential workers are not covered by these programs, and their employers with 500 or more employees do not get the dollar-for-dollar federal tax credit to cover costs.
Moreover, as Americans return to work and continue to balance the unprecedented lack of child care and widespread school closures, the narrow focus of these programs will become more acute. Particularly when recent surveys show that three quarters of parents are concerned of their child’s potential exposure to COVID-19 when they go back to child care.
Congress should continue to work with the Administration in a bipartisan fashion to further reform the paid sick and family leave provisions to support businesses and families across the country.
Small businesses employ close to half of the private-sector workforce, and new and young small businesses create nearly all net new jobs every year in the U.S. economy. Getting America back to work will rely heavily on existing small businesses reopening and new ones getting started.
Employers of all sizes will continue to struggle with workers balancing child and family caregiving responsibilities due to closures of schools, child care facilities, and adult care centers. Consequently, paid family leave will be essential to protecting workers with caregiving needs and speeding up their return to work and small business recovery.
Without more robust paid leave assistance, parents will struggle to meet caregiving and work responsibilities, small businesses will fail, and we risk prolonging this economic and public health crisis.
Five key takeaways:
- Family Demands are a Big Challenge Facing Small Business Amidst COVID-19: While declining revenue is the biggest challenge, family and child responsibilities due to school closures ranks second:
- Most employers (74%) say that declining revenue is very challenging (45%) or somewhat challenging (29%).
- Half of employers (52%) say family and child responsibilities from school closures are very challenging (26%) or somewhat challenging (26%).
- Nearly three-quarters of small business executives (71%) are very concerned (35%) or somewhat concerned (36%) about their employees who have children at home because of school or child care closures due to COVID-19.
- Additionally, 23% of employers say that the most significant challenge to having employees working remotely during COVID-19 crisis is family, child-care, and home-schooling needs among staff.
- Utilization of New Federal Programs: Despite the high profile of the Paycheck Protection Program, just as many small businesses are using the paid sick and paid family leave tax credits.
- 46% are not using any new federal provisions.
- 29% are using assistance from the PPP.
- 28% are using paid leave tax credits under the FFCRA.
- Mid-sized Small Businesses See Paid Leave as Helpful: Small businesses (21-500 employees) are more likely to say the paid sick and paid family leave provisions help their business.
- A plurality of small business executives (44%) report that the paid sick and family leave protections and tax credits under the FFCRA helps their business, although 37% say that it hurt their business.
- Businesses with 21 – 500 employees are more likely to say the Act helps their business, while small business executives with 20 or fewer employees are slightly more likely to say the FFCRA hurt their business.
- Among the small businesses who laid off workers (28%), paid leave ranked third in their decision.
- 94% say decline in revenue was a major (79%) or minor (15%) factor.
- 76% say that loans from the Paycheck Protection Program and the retention tax credit are not large enough to stay in business was a major (48%) or minor (28%) factor.
- 70% say that the paid leave program was a major (40%) or minor (30%) factor.
The FFCRA helps employers provide paid leave to employees by reimbursing employers through a dollar-for-dollar tax credit for all qualifying wages. Given the immediate and unprecedented cash crunch facing employers, the fact that they do not immediately receive these benefits could be influencing small business owners to report that paid leave requirement is playing a large role in decisions to lay off workers.
Additionally, the CARES Act, which was passed subsequent to FFCRA, significantly bolsters unemployment benefits, which is likely also influencing decisions among employers to rely on expanded unemployment insurance as a form of government-run paid leave.
- The Unemployment Insurance programs are serving as a form of Government-run Paid Leave. The data show that employers are maintaining a connection to their furloughed workers by providing health benefits and planning to re-hire them, meaning that employers are simply having them turn to a government program for pay.
- Of the employers who laid off (28%) and furloughed (30%) workers, most employers plan to rehire laid off (64%) and furloughed (70%) workers.
- More than three-quarters of employers that furloughed workers who were previously providing health insurance are still providing insurance to those workers (76%).
[The survey was conducted from April 8-12 2020, among a national sample of 502 small business executives (371 small business owners, 131 director+ executives at small business with 2-500 employees). The interviews were conducted online. Results from the full survey have a margin of error of plus or minus 4 percentage points.]