Small Businesses, Big Challenges

Written By: Tawny Tesconi, Executive Director
Published: August 3, 2020

Local small businesses, like many of our members and businesses that support our members, are facing unprecedented times. Sales most likely are down, the cost of doing business has risen due to safety protocol measures, companies are having to invest in unplanned technology upgrades and the older population with a higher amount of discretionary income are cocooning and not spending money.

Small businesses are corporations, partnerships, or sole proprietors with 1-500 employees are less. 500 employees? That seems big to me and our County leans towards the smaller end of that range. In fact, based on some statistics from the Economic Development Board, over 85% of our 20,000 local businesses employ less than 20 people. The stats I found are dated – they are from 2016, but around 55% of our County’s establishments have 1-4 employees. We are a community that thrives on quality over quantity and niche products and specialized services over the mundane and ordinary. “Sonoma County” in itself is a brand because of the high standards set by the local “mom and pop” businesses that make up our economy.

Small businesses represent 99.9 percent of all US businesses and I am certain that holds true for Sonoma County. The fees and taxes paid and collected by these businesses largely support our local governmental agencies. Sales tax, transient occupational tax (often called hotel tax), property taxes, business licenses and the income tax paid by all the employees who work for small businesses go into the coffers of state and local public agencies. And this list of taxes and fees is only a partial glimpse of how small businesses fuel the government engines. 

It is estimated that for every dollar taken in at a business, roughly 25 cents of it goes to taxes or business fees. And these numbers are national averages – I am certain that is higher in California since our state ranks number one in sales and income taxes in our nation. Out of the remaining 75 cents, businesses still must pay employees, rents or mortgages, insurance, purchase goods and eke out a living for their own families.

So – I am baffled why our local leaders and community members believe that the best way to solve all of today’s challenges is to put more financial strain on our local small businesses. 

The City of Santa Rosa, through an emergency ruling, now requires small businesses to provide up to 80 hours of sick time pay to an employee who is not able to work for several COVID-related reasons. An approved absence could be related to the employee being sick themselves, the need for childcare, the requirement to quarantine because of exposure to someone who has tested positive for the virus or if the employee is caring for someone who is quarantined or isolated because of the virus. There is no requirement around the relationship with the person for whom the employee is caregiving for. It does not have to be a household or family member – it can be anyone anywhere. Now, wouldn’t you surmise that the employee most likely will be gone for more than two weeks since they are exposing themselves to someone who may have the virus? 

Let’s look at a potential scenario. A small sandwich shop owner has 4 employees and Employee #1 (an alias) partied all weekend with their “social bubble”. The following week Employee #1 works with the other three employees. All employees are following strict protocols at work, but an employer has no control over what happens during non-work hours. Ten days after the party weekend, Employee #1 discovers that someone at the social gathering tested positive for COVID-19. Most likely all the sandwich shop employees are going to have to quarantine for a couple of weeks. What has this done to the small business owner? Not only will they have to shut down their business since they have no employees available to work, but on top of it, they will have to pay 80 hours of sick time to these staffers. 

With so much federal support being doled out to local governments, shouldn’t the City of Santa Rosa cover these costs of this sick time if they want to protect its residents? And, to further fuel the fire, the City’s ordinance exempts government employers like the City of Santa Rosa. Really?

The County of Sonoma is also looking at a similar ordinance that will most likely hit an August agenda and I guarantee that Farm Bureau will be weighing-in on the negative impact this action will have on our members.

This is one example of the straw that is going to break the business-owning camel’s back. But the ability of small businesses to stay afloat will be further aggravated by rent relief ordinances, extended unemployment benefits, increased sales taxes from two potential County ballot measures, minimum wage requirements, the Split Roll, “Prop 13 rollback” and most significantly – the sluggish economy. 

So – how goes that American Dream?

 

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