COVID recession shows need for changes

My father, and his father before him, were small business owners. And though my time in the private sector was brief, I remember well the emotional impact of pouring one’s heart into a business only to see it vanish because of a seismic shift in economic realities.  

All small businesses matter. Our national security depends upon a robust small business ecosystem—it is the backbone of our economy. Tens of thousands of Oregonians depend upon a locally owned enterprise for a job.

The COVID recession demonstrates that our legacy thinking for wealth generation is no longer aligned with 21st century realities. Global supply chains leave us ill-prepared for emergencies. Many tourism related service industry jobs vanish when people must shelter at home. And durable goods manufacturing demands significantly decline in times of global uncertainty.

The critical factor for survival in times like this is capital. Access to affordable capital is the difference between businesses that endure—and those that cannot. This crisis has illustrated how big business continues to maintain ready access to capital—as small businesses struggle just to keep the lights on, and the lease paid. Absent an immediate rescue, Oregon will permanently lose thousands of home-grown small enterprises.

It is time for a new playbook. Accordingly, I urge three new policies: 1. Establishment of sector-specific assistance to businesses with an Oregon workforce; 2. Zero-interest grants for all businesses willing to maintain current employees; and, 3. Establishment of an Oregon State Bank (through amending the Oregon Constitution). 

Oregon must act now. Congress passed an enormous assistance package that was misaligned with the realities of “small business” and “working families.” There is a promise of more assistance to come, but we have lost too much time already.  

We must reward companies that put employees first. We must reward partnerships through providing additional assistance to the businesses that support their employees. Loans are insufficient. Many small businesses will not take out a loan because of the uncertainty of this crisis; they are justifiably wary of adding debt without a guarantee of future sales.   

It is time that we accept “For- Profit” banks are an inappropriate instrument for disbursing large-scale public financial assistance. This was demonstrated during the last “Great Recession” and again this year. Banks are built to minimize risk: it is counter-intuitive for banks to push dollars “out the door” as envisioned. The failure today, again, of timely disbursement of public assistance to small businesses is not the fault of the banks but of Congress.  

Ultimately, the challenge we face today is less about the COVID-19 contagion than a decades-in-the-making breakdown of our strategic investments and underfunded societal safety nets. COVID-19 did not create our problems, it illuminated legacy thinking and systemic vulnerabilities. Luckily, we have a chance to save our small businesses if we demand structural changes.

(Paul Evans represents District 20 in the Oregon House of Representatives.)