
One-third of New York’s small businesses may be gone forever - ajay-d
https://www.nytimes.com/2020/08/03/nyregion/nyc-small-businesses-closing-coronavirus.html
======
yashap
It’s insane to me that we don’t just make masks 100% mandatory when you’re
outside your own home. We don’t have exact numbers on how effective masks are,
but when everyone is wearing them, evidence suggests “very effective.”
Anecdotal examples - a man with a dry cough, that was later diagnosed to be
COVID, wore a mask on the long flight from Wuhan to Toronto, had
extended/close contact with 25 people, but he was wearing a mask, and none of
them contracted it from him [1]. 2 hairdressers in Missouri had COVID, but
they and their clients all wore masks, they had extended close contact with
140 people and none of them got COVID [2]. We know masks are most effective
when the infected person wears them, and we know that asymptomatic spreaders
are common, so really we just need everyone wearing masks for all close
personal interactions.

We could keep the economy decently open AND keep COVID cases down dramatically
with a simple law to mandate masks 100% of the time when outside your own
home. In plenty of professions people are wearing masks all day long now, it’s
uncomfortable at first, but you get used to it. Crazy that this isn’t being
strongly considered.

[1]
[https://www.cmaj.ca/content/192/15/E410](https://www.cmaj.ca/content/192/15/E410)
[2] [https://www.washingtonpost.com/business/2020/06/17/masks-
sal...](https://www.washingtonpost.com/business/2020/06/17/masks-salons-
missouri/)

~~~
marcell
Those two studies you cite aren't strong scientific evidence. There is no
control group, so we don't know what would have happened if they had not been
wearing masks. Also the sample size is quite small (n=2 across the two
studies).

I've seen some studies that have good controls on influenza, in particular
there is a college dorm study that compared no intervention vs. masks vs. hand
washing: [https://www.cidrap.umn.edu/news-perspective/2010/01/masks-
pl...](https://www.cidrap.umn.edu/news-perspective/2010/01/masks-plus-hand-
hygiene-reduced-ili-college-dorm-study) . This specific study doesn't give
strong evidence that masks stop influenza spread.

Also, the individual rights argument is pretty strong. If mask wearing is
already at 70% without any government mandate, I'd want really strong evidence
and strong reasons to justify government intervention just to push that number
a little higher.

~~~
elliekelly
The individual rights argument is not pretty strong. Here’s a partial list of
things I did today for the sake of my neighbors/community that are also
government mandated:

\- Wore a shirt

\- Turned on my headlights and used my turn signals

\- Held on to my empty coffee cup until I got to a trash can when I could have
just dropped it on the ground

\- Kept my dog on a leash and picked up his poop

\- Parked in a parking spot instead of conveniently stopping my car in the
middle of traffic directly in front of the grocery store door

I’m sure there are plenty others. Being a member of society comes with a lot
of privileges and a handful of obligations but it only works if we all do our
part. No freeloaders, right?

Edit: An extra word

~~~
smnrchrds
> _\- Wore on a shirt_

Where do you live where this is government mandated?

~~~
elliekelly
I’m a woman so my nipples are criminalized in most of the United States.

~~~
smnrchrds
That's terrible. I'm glad that this is not the case here in Canada. It does
make no sense whatsoever for it to be like this in the US. I agree with your
other examples, but this one is clearly unjust and should change.

~~~
rossdavidh
In many parts of the U.S., it's not actually illegal for women to be topless,
they just don't. It is often a requirement for a liquor license, however. For
example, where I live in Austin, Texas, state law does not prohibit a woman
being topless, and Texas is not generally among the most liberal of states.

~~~
undersuit
Proactively mitigating the abuses that would emerge from a state that doesn't
need to encourage more low paying jobs that have a very high rate of sex
trafficking? At least the Bud Light at the strip club isn't $12 like that
place I went in Las Vegas.

------
paulgb
It seems strikingly brazen for the landlords to start asking for full rent in
this market. Even before covid, vacant storefronts were sitting on the market
for months or years due to retail and banking moving online[1]. Good luck
finding someone who wants to start a new restaurant in the next 9 months or
so. Even if they think they can force the current tenant into bankruptcy and
collect, there won't be much to collect after taking away the tenant's only
income stream.

It all just feels very short-sighted.

[1] see, e.g., from 2018:
[https://www.nytimes.com/interactive/2018/09/06/nyregion/nyc-...](https://www.nytimes.com/interactive/2018/09/06/nyregion/nyc-
storefront-vacancy.html)

~~~
itsoktocry
> _Even if they think they can force the current tenant into bankruptcy and
> collect, there won 't be much to collect after taking away the tenant's only
> income stream._

A lot of landlords have no choice. They themselves are businesses, often
leveraged to the hilt, with not a whole lot of room to offer grace.

And yes, I realize there are massive REITs behind some of these properties,
that have large earnings and reap huge windfalls for shareholders. That
doesn't mean they're equipped to receive no income for months during a
pandemic. It's sort of the way our economy works: right on the edge at all
times.

~~~
chillacy
Keeping a tenant at 80% rent is still better than having no tenant at 100%
rent. If business are having a few quarters of negative profitability, why
can't the same happen to commercial real estate?

~~~
jedberg
Rent control. It makes more sense to keep the place vacant than to reduce the
base rent, which could take decades to make up.

~~~
ShamelessC
I'm not familiar with how rent control works. If they lowered prices due to
the pandemic would they really have to keep them that low indefinitely?

~~~
AdrianB1
Rent control in most places means you cannot increase the rent more than x%
per year, where x is fairly low. If the rent is decreasing, you are not
allowed to put it back to the original level if the difference is larger than
x, so you need to do x% per year for several years just to revert to previous
levels.

~~~
sullyj3
That seems like a seriously perverse incentive if kicking people out and
leaving the building vacant becomes more economically prudent in the long run

------
otoburb
>> _Between early March and early May, roughly 110,000 small businesses
nationwide shut down, according to researchers at Harvard._

I tracked down the paper[1] they referenced and Table 5 was an eye opener.
While "only" 110K small businesses were estimated to have shut down out of
30M[2] small businesses nationwide (0.37%), the really grim survey results are
summarized in Table 5 of the paper titled "Reported Likelihood of Remaining
Open by Industry and Hypothetical Crisis Duration". The
restaurant/bar/catering category surveyed back in late March believed their
chance of survival would only be 0.15 if the shutdowns lasted through to
December.

[1]
[https://www.nber.org/papers/w26989.pdf](https://www.nber.org/papers/w26989.pdf)

[2] [https://cdn.advocacy.sba.gov/wp-
content/uploads/2019/04/2314...](https://cdn.advocacy.sba.gov/wp-
content/uploads/2019/04/23142610/2019-Small-Business-Profiles-States-
Territories.pdf)

------
Mengkudulangsat
Is there any proven mechanism to put a segment of society "on-pause" for
while? Each business entity submits a hibernation plan to central authority,
funds provided and liabilities put on hold by decree. What do governments do
historically during sieges and plagues?

Are we doomed to live through these boom-bust cycles over and over again?

~~~
BoiledCabbage
Most businesses while closed could have very minimal costs.

Let's take a restaurant. Few people dining, so minimal labor costs, reduced
deliveries, so minimal cost of goods/foods. But they still have enormous rent
costs.

My guess is that 90% of businesses could have gone on outside, easily
weathered this storm, and picked right back up where they left off if we had
simply paused rent payments. This would have meant property owners wouldve
been short money to pay mortgages, so we simply hold off on mortgage payments.
Banks can weather that without issue, or receive govt loans to tide them over
and structure of the economy is ready to pick up where it left off.

A similar solution in residential housing could've also worked well.

~~~
Cshelton
So you need to understand how the commercial real estate world works to know
you can’t just “hold off on mortgage payments” for very long. Most loans
backed by CRE are securitized. So they are packaged into bonds. These bonds
are not just banks, they are funds. Funds that hold and generate monthly
payments for millions of American’s pensions/retirement/etc. This isn’t just
rich old landlords won’t get their money, it is a large number of Americans,
the money will stop. Bonds will simply default from lack of loan payments.
Yes, the Gov _can_ keep it afloat for a short period, but we’re talking
trillions of dollars. This is the giant elephant in the room right now that
the “Main Street’ is unaware of. It could potentially be very nasty. What
happens if 50 million+ Americans stopped receiving/had cut significantly their
pension/retirement payments? CRE is a top asset class, one of the biggest.

~~~
dredmorbius
Sounds like what you're saying is that those bonds and investments carried
unrealised or unrepoeted risk.

That's the lenders' (and regulators') responsibility.

Fixed-income investors are still granted emergency income. Their previous
lifestyles may no longer be sustainable, but they'll be able to afford food,
clothing, shelter, and other true necessities.

~~~
pravus
I would look at this as being more of a black swan event. No investor can
factor those in because they are unknown by definition.

This isn't about lifestyle. If CRE crashes, this is 2008 all over again and
probably an order of magnitude worse. Commercial real estate has been a very
active asset class over the past decade and it's huge.

~~~
dredmorbius
"Global Catastrophic Risk Survey", 2008 [pdf]

[http://www.global-catastrophic-risks.com/docs/2008-1.pdf](http://www.global-
catastrophic-risks.com/docs/2008-1.pdf)

Includes discussion of a "biggest natural pandemic".

Posted to HN, if not discussed, on Oct 2, 2016.

[https://news.ycombinator.com/item?id=12623582](https://news.ycombinator.com/item?id=12623582)

The question of GCR has been raised numerous other times on HN, though
admittedly more recently of late:

[https://hn.algolia.com/?dateRange=all&page=0&prefix=false&qu...](https://hn.algolia.com/?dateRange=all&page=0&prefix=false&query=global%20catastrophic%20risk&sort=byDate&type=story)

Infectious disease features prominantly among discussions of GCR:

[https://web.archive.org/web/20120912020526/http://gcrinstitu...](https://web.archive.org/web/20120912020526/http://gcrinstitute.org/research.html)

Even software executives have suggested concern, this example from 5 years
ago:

[https://youtube.com/watch?v=6Af6b_wyiwI](https://youtube.com/watch?v=6Af6b_wyiwI)

As has the US military, from 2017:

[https://www.darpa.mil/program/pandemic-prevention-
platform](https://www.darpa.mil/program/pandemic-prevention-platform)

Economic impacts of pandemic have seen significant scholarly treatment, here
looking at 1990-2018:

[https://scholar.google.com/scholar?as_ylo=1990&as_yhi=2018&q...](https://scholar.google.com/scholar?as_ylo=1990&as_yhi=2018&q=pandemic+economic+impacts&hl=en&as_sdt=0,39)

Less black swan than head-buried ostrich, it might appear.

------
mensetmanusman
This is why S&P stocks are rising. Consumers will still need to buy, but the
pandemic will drive massive consolidation to large firms that can weather the
financial strain.

~~~
Pandabob
Apparently, if you separate the 5 biggest tech companies (Apple, Microsoft,
Google, Facebook, Amazon) the rest of S&P 495 is down about 11 percent Year-
to-Date [1].

[1]: [https://seekingalpha.com/article/4363542-big-5-twilight-
zone](https://seekingalpha.com/article/4363542-big-5-twilight-zone)

~~~
kanobo
Thank you, that's an excellent fact that rarely gets mentioned in the news or
in comments.

~~~
cableshaft
Yeah no kidding. Was completely oblivious to this. Although I knew Amazon and
Apple's stock had shot into the stratosphere somehow (Amazon I totally get,
Apple not so much)

~~~
pradn
Apple might be skyrocketing b/c

1\. it's post-covid revenues weren't significantly impacted 2\. it's a blue
chip stock in an era where safe securities like bonds yield nothing (there's
no where else to put money) 3\. fund managers don't want to miss out on the
up-swing momentum, however irrational it may be

~~~
Pandabob
Yup. I'm honestly impressed that Apple's services revenue is now 50% of iPhone
revenue [1].

[1]: [https://www.cnbc.com/2020/07/30/apple-aapl-
earnings-q3-2020....](https://www.cnbc.com/2020/07/30/apple-aapl-
earnings-q3-2020.html)

------
MattGaiser
What percent of small businesses fail every year?

To understand the damage, you have to know how what the baseline closure rate
is. I am not sure what the rate is in the restaurant industry, but it seems
extremely high even in regular times.

~~~
JMTQp8lwXL
This is the businesses that made it. The vast majority fail. The fact that
one-third of a very small percentage are newly failing is significant.

~~~
MattGaiser
> The fact that one-third of a very small percentage are newly failing is
> significant.

Completely reasonable. But how significant?

Is 1/3 50% more than usual?

Is it 3x as many as usual?

Is it an order of magnitude more?

------
tarr11
Many small businesses have signed personal guarantees on their commercial
leases, meaning that landlords will come after them even after they've closed.

Restaurants for example will often have 5-10 year lease terms.

~~~
icelancer
>> Many small businesses have signed personal guarantees on their commercial
leases, meaning that landlords will come after them even after they've closed.

Yep. Just signed a 7 year lease and personally guaranteed it. More things few
people are talking about when advocating for lockdowns.

~~~
toomuchtodo
Personal bankruptcy is only on your credit report for 7 years, versus being on
the hook for sums you could never afford to repay. You'll be eligible for
credit right away after the discharge (because you can't go BK again for 8
years), and eligible for a low down payment FHA mortgage (3-5% down) after two
years (from discharge date).

~~~
nmfisher
Sure, but the business owner probably also lost his/her house in the process.

Just because it's not permanent, doesn't mean bankruptcy is an easy option.

~~~
toomuchtodo
During bankruptcy, all of your property will be placed in a bankruptcy estate.
If you want to keep your home, you can usually exempt it from the estate and
will continue to be liable for the mortgage as long as you make payments. If
you don’t have enough equity in the property to secure junior liens on the
property, such as a home equity loan, those will be stripped away and you’ll
only be liable moving forward for the senior lien (primary mortgage).

There’s a lot of nuance, and it’s hard to generalize, but the system is
designed to provide some relief in a reasonable manner.

~~~
nmfisher
I don't know what it's like in the USA, but Australian banks simply don't lend
to small businesses without taking security over (usually) real estate. This
inevitably means a senior mortgage over the principal's primary residence.

That being said, Australian banks are notoriously tight-fisted for any non-
property investment, so perhaps things are more amenable in the USA.

~~~
toomuchtodo
US credit flows like water, despite our generous bankruptcy laws.

------
pnathan
> “It’s the most frustrating situation because it’s not about passion anymore
> or the work you put in or the hours you put in,” he said. “It’s all about
> the mitigating circumstances that are out of your control.”

this is generally true about business. if the regulatory environment, the
marketing is good, or the loan office is good (etc), you get lucky. if a
celebrity likes your yoghurt. etc.

hard work is the other side of this, but the role of luck is huge.

anyway, looks like we're headed into the first real bust in a long long time.

------
zxcvbn4038
This might actually be a good thing in the long run. Real estate prices in NYC
were insane before the pandemic, landlords would purposefully keep property
off the market and toss out long established businesses on hopes of scoring a
payday from a new renter. Now we are in a situation where it is just
impossible to pack enough people into a space to earn a profit at $3700 per
square foot. No doubt it will cause some people a lot of pain up front but
eventually it might be possible for small businesses and families to be in
Manhattan again.

------
bogomipz
Another source of some sobering figures was the NYC Hospitality Alliance which
just published their July Rent Report. 83% of respondents did not pay their
full rent in July and 37% of respondents reported they paid no rent.[1]

[1]
[https://thenycalliance.org/assets/documents/informationitems...](https://thenycalliance.org/assets/documents/informationitems/jlBDT.pdf)

------
chimeracoder
It's so disheartening to see both Cuomo and DeBlasio's absolutely pathetic
response to the pandemic - really on every level, but in the case of this
article, the economic response.

Nearly every other city has taken major steps to make it easier for people to
spend time outdoors, for restaurants and bars to serve patrons outdoors,
assistance programs for local small businesses, and so forth. By contrast,
DeBlasio has been chipping _away_ at Open Streets, cancelled Summer Streets,
and both he and Cuomo have been actively impeding restaurants and bars from
adapting to serve food and alcohol outdoors.

They've insisted that bars cannot serve alcohol without serving "real food"
(nachos doesn't count), which is a huge blow to bars which don't have a full
kitchen. Even for restaurants and bars which do, though, they've been
incredibly aggressive with issuing citations. Many have complained that, if a
server clears the empty dinner plates before patrons are finished with their
drinks, state inspectors will cite them because "there's no food", even though
the bill shows that they were charged for dinner. Others have complained that
the city has cited them for "violations", but unlike the health inspectors,
doesn't actually provide a list of the offenses that need to be corrected.

In addition, they've provided ~zero financial assistance for small businesses
- particularly bars and restaurants, which are hit the hardest. That's in
stark contrast to other cities in the US and elsewhere, which have given
direct cash assistance to help them weather the crisis.

It's a disaster all around, and neither the governor nor the mayor have shown
any interest in taking meaningful steps to support the state's largest
economy. (Cuomo has done a better job at framing his actions to the press, but
when you actually look at what he's done, he's done a really awful job).

~~~
gregshap
Sure DeBlasio and Cuomo 100% bungled the response in March especially, but you
have a lot wrong here.

The city has been massively transformed to allow outdoor dining. Easily 1000's
of restaurants and bars now have outdoor dining in what would usually be
street parking spaces. Manhattan and Brooklyn especially. I've seen less of
this in the Bronx, but most restaurants stayed open doing takeout anyway.

NYC gave direct cash grants to businesses with <10 employees. I know business
owners got the money. Those grants were approved and funded before Care Act /
PPP was passed. Once PPP opened there was no point in NYC trying to compete,
the city can't print money.

Other states were able to give more direct financial assistance to businesses
because they didn't have to spend so much on actual COVID response. Remember
NY received a tiny amount of federal funding relative to population and actual
pandemic impact, because of who was in control of the funding formula.

~~~
chimeracoder
> Sure DeBlasio and Cuomo 100% bungled the response in March especially

Okay, so we agree on that.

> The city has been massively transformed to allow outdoor dining. Easily
> 1000's of restaurants and bars now have outdoor dining in what would usually
> be street parking spaces.

As journalists have documented extensively, New York's expansion of street
space is incredibly paltry compared to what other cities in the US have done.
No, it's not _zero_ , but it's clearly not enough (per the article), and it's
not even keeping pace with what other cities are doing.

> NYC gave direct cash grants to businesses with <10 employees. I know
> business owners got the money. Those grants were approved and funded before
> Care Act / PPP was passed. Once PPP opened there was no point in NYC trying
> to compete, the city can't print money.

Yes, there is a a point to the city (and the state) providing direct aid to
local businesses on top of the federal assistance. And there _absolutely_ is a
point to the city and state targeting funds to essential industries that are
hit particularly hard - which is what plenty of other jurisdictions have
already done.

> Other states were able to give more direct financial assistance to
> businesses because they didn't have to spend so much on actual COVID
> response. Remember NY received a tiny amount of federal funding relative to
> population and actual pandemic impact, because of who was in control of the
> funding formula.

First of all, New York wouldn't have needed to spend as much on COVID response
if Cuomo and DeBlasio had actually done their jobs in January or February. But
more importantly: the limiting factor here isn't money. As I outlined in my
post, the state is actually _spending_ money in ways which are directly
_harmful_ to small businesses, with no justifiable public health gain.

DeBlasio and Cuomo could literally just base their policies on what other
cities and countries have done with success, and that would already be miles
ahead of what they've decided to do instead. The problem isn't that they
can't. The problem is that they've genuinely expressed zero desire to.

------
gregshap
> "She asked her landlord for a break on her $6,000 a month rent, but he
> refused. Ms. Dillon said she decided in early April to close down."

Commercial evictions have been stopped in New York since March. It seems like
a lot of people underestimate their bargaining power in a pandemic. Who else
is the landlord going to rent to anyway?

------
LatteLazy
"may" is an antagonym: may means the same as may not.

~~~
behindsight
Although I understand the rationale, lumping vague probability words like
"may", "could", "might" as antagonyms (auto-antonyms) doesn't seem valid.

Whether you use "may" or "may not" would indicate the leanings of your null
hypothesis / default assumption.

------
dharma1
We may only be halfway, one third or less into this pandemic.

I really hope that

1) the early vaccines will work

2) other mitigation strategies (masks, social distancing, quick tests at scale
etc) will succeed in keeping R under 1 and small businesses above breakeven in
case we're in for another 1-2 years of covid flare ups

If the above don't work, we could be looking at mass unemployment, unbearable
private and government debt, and more civil unrest

~~~
ba2plus
>If the above don't work, we could be looking at mass unemployment, unbearable
private and government debt, and more civil unrest

Given the fact that there's never been a successful coronavirus vaccine, and
that there's a huge portion of the American population that regards mask-
wearing and hand-washing to be tyrannical affronts to civil liberties, I think
we all know how things are going to play out.

------
fallingfrog
What do you all think is going to happen when climate change hits? This little
crisis is all just a rehearsal for the real thing, you know.

------
tehjoker
This is what Lenin said about financial capitalism and monopoly. Every boom-
bust cycle, endemic to capitalism, results in further consolidation. The free
market / small producer capitalism that everyone says they like died around
the 1880s-1890s when large firms began to dominate. Everything said in favor
of that form since then has been essentially nostalgia for a lost time that
wasn't even that good to begin with.

If the trust busters don't come back, we will see essentially a kind of
feudalist economy develop around a few extraordinarily powerful companies as
every ladder is pulled up behind them and smaller institutions are "creatively
destroyed".

[https://en.wikipedia.org/wiki/Imperialism,_the_Highest_Stage...](https://en.wikipedia.org/wiki/Imperialism,_the_Highest_Stage_of_Capitalism)

~~~
Ericson2314
This shouldn't be down-voted. Just because you don't like something Lenin
_did_ doesn't mean all his _observations_ are wrong.

I recently found [https://ilr.law.uiowa.edu/print/volume-100-issue-5/all-i-
rea...](https://ilr.law.uiowa.edu/print/volume-100-issue-5/all-i-really-need-
to-know-about-antitrust-i-learned-in-1912/) which was a great read. Eugene V
Debs had a similar conclusion about consolidation being inevitable, but
thought that that was a _good_ thing.

And to be clear, whether competition is possible / what's the right trade-off
between efficiency and robustness, is really important to grapple with. If we
don't know how to e.g. break up Google, proposals like having workers on
boards become dramatically more essential.

~~~
sdinsn
> This shouldn't be down-voted. Just because you don't like something Lenin
> did doesn't mean all his observations are wrong.

He is probably being downvoted for saying that consolidation will lead to
feudalism. That is a ridiculous idea that deserves a downvote!

~~~
tonyedgecombe
He said a "feudalist economy" which seems an apt description for an economy
run by a handful of companies.

