RELEASE: Economic Recovery of Women- and Minority-Owned Businesses

SACRAMENTO – At a joint hearing held by the Select Committee on Small Business and Entrepreneurship (SB&E) and the Jobs, Economic Development and Economy (JEDE) Committee; advocates, community development professionals, and business owners shared their perspectives on the challenges facing women- and minority-owned businesses during the latter stages of the COVID-19 pandemic. Wednesday’s hearing was the second in a series of hearings sponsored by the Assembly Select Committee on SB&E and the third hearing for the Assembly JEDE Committee examining the impact of COVID-19 on small businesses and the opportunities to support a more inclusive economic recovery.

“Our ability to stabilize these smallest, most vulnerable of businesses and position them thrive as we emerge from this pandemic is going to be critical not just to the welfare of these businesses but to the welfare of California’s economy,” said Assemblywoman Cottie Petrie-Norris (D-Laguna Beach), Chair of SB&E Select Committee. “Today’s hearing shed light on the devastating, disproportionate impacts of the pandemic on women- and minority-owned businesses. I look forward to working with Chair Cervantes and my colleagues as we continue to push for a swift, just and equitable recovery for California.”

“In our earlier hearings, committee members were briefed on the COVID-19 economy and its impacts on small business. Today’s hearing built upon many of these same themes and delved more deeply into the pandemic’s impact on women- and minority-owned businesses and strategies to redress these challenges,” said Assemblymember Sabrina Cervantes (D-Corona), Chair of the Assembly Committee on Jobs, Economic Development, and the Economy.  “We chose this hearing topic due to the inordinate impact of the pandemic on businesses owned by women and people of color. As we consider how to better support these businesses, we will have to address not only systemic roadblocks, but also the unique challenges of the COVID-19 pandemic. I look forward to continuing working alongside my colleagues, including Chair Petrie-Norris and the Committee on Small Business and Entrepreneurship, to advance solutions to create a more inclusive path to recovery for all businesses throughout California.”

The COVID-19 pandemic has been devastating for small businesses and their employees all across our state, impacting women- and minority-owned businesses the most. Nationwide, between February 2020 and April 2020, the number of active Black-owned businesses declined 41%, Latinx-owned businesses declined 32%, and Asian-owned businesses dropped 25%, versus 21% for businesses overall.

One of the reasons women and minority business owners have been especially hard hit during the pandemic is that their businesses tend to be smaller and of a younger tenure than businesses overall.  Not surprisingly, early stage businesses and small businesses tend to be less resilient in times of economic stress.  In addition, a majority of women- and minority-owned businesses are in the same business sectors that were hardest hit during the initial months of the pandemic, including food services and personal services, such as hair salons.  And, finally, women have, in general, bore an uneven burden relative to the care of school age children and older adults who have needed additional care and attention during the pandemic.

While the pandemic has presented profound challenges for all businesses, women- and minority-owned businesses faced great obstacles prior to the COVID-19 pandemic. Women- and minority-owned businesses have routinely had unequal access to capital, as well as to public programs and services which should have helped address the historic underinvestment in low-income areas, public education, and minority communities, in general. 

Among the major recovery challenges facing California is how to address the uneven economic impacts of the pandemic on low-income communities, low-wage workers, and businesses owned by women and persons of color. Panelists shared personal stories of the difficulty to maintain and operate their businesses during the Pandemic and reflected upon a number of unique challenges they continue to face, including the persistent lack of access to capital for both new and growing businesses, competition for low-wage workers, regulatory hurdles, rising costs of supplies and goods, and more.

Several legislative and budgetary actions were highlighted for Legislators, including the need for additional funding and the sunset extension of the Small Business Technical Assistance Expansion Program, the codification of the state’s small business procurement goals and addressing regulatory modernization in an effort to remove systemic structural barriers in access to government services and compliance. In addition, the Legislators repeatedly heard from witnesses about the need for “trusted partners” to ensure that women- and minority- owned businesses are able to fully leverage state programs.

WHAT OTHERS ARE SAYING

“With California ranking 11th in states across the country for business closing during this pandemic, state lawmakers must take immediate action to stop the bleeding,” said Eugene Cornelius, Jr., Senior Director, Center for Regional Economics and California Center, Milken Institute.

“Thank you to both Chair Petrie-Norris and Cervantes for their leadership in showcasing the importance of women and minority businesses in the state’s economic recovery. With women and minority-owned businesses being disproportionately affected by the pandemic economy, I look forward to building a shared vision of how the state can support these groups moving forward,” said Nancy Swift, Chair of the CA Women’s Business Center Network.

“It is well known that California is home to the largest share of minority business enterprises in America, surpassing all other states. What is less understood about the devastating impacts of Covid-19 is that the impact continues to affect and fall hardest on women and minority-owned businesses. We appreciate the committee’s attention and focus on providing solutions to address all those small businesses most impacted by this pandemic,” said Pat Fong Kushida, President and CEO, the California Asian Pacific Chamber of Commerce.

“Local businesses in our community would have disappeared if it weren’t for the support of organizations like ours. These small businesses need a trusted messenger from  the community to connect with them and meet them where they are, otherwise they won’t be able to access the critical resources available,” said Carmen Herrera-Mansir, Executive Director, El Pájaro Community Development Corporation and host to the Regional Women’s Business Center.

“From providing affordable housing to affordable commercial spaces, CDCs, such as EBALDC, are essential community anchors that play a vital role in creating and safeguarding the spaces integral to healthy, vibrant, and equitable neighborhoods. By ensuring the long-term health of our small businesses and infrastructure that supports them, particularly CDCs, we are ensuring the long-term health of our local neighborhoods and state as a whole," said Andy Madeira, Chief Executive Officer, East Bay Asian Local Development Corporation (EBALDC).

“Small companies are like children; with the right upbringing and proper support, the results can be astonishing,” said Monica Ochoa, owner of 1Day Cleaning.

“We are thankful to the committee for bringing light to the overwhelming challenges that women and minority-owned businesses are faced with during this pandemic. As an African American business owner we have seen first hand the devastating impact COVID-19 has on our community, families, and businesses. As many of our businesses are trying to recover and survive, the specific need to focus on solutions to address the hardest hit small businesses is imperative to the California economy,” said Nicole McDonald, owner of S.T.E.A.M. Academy.

“For decades women have driven new businesses and job creation. Before last year, women-owned small businesses, with fewer than 500 employees, employed 2.1 million American workers and generated $361 billion in annual revenues. Yet, the COVID-19 global pandemic laid racial inequity and gender disparity bare for all to see. More women than men lost jobs, and remained unemployed for longer periods of time. The lack of childcare, school closures, and other challenges disproportionately impacted working women. Women's workforce participation fell to its lowest level since 1988 with 1.5 million leaving thereby creating a #shecession. California now needs to rebuild and create opportunities and expand resources that ensure women business owners and women in the workforce can thrive,” said Assemblywoman Wendy Carrillo (D-Los Angeles).

The full hearing can be viewed on the Assembly website  https://www.assembly.ca.gov/media/joint-hearing-jobs-economic-development-economy-select-committee-small-business-entrepreneurship-20210818/video. 

Public comment and witness documents can be viewed on the JEDE website https://ajed.assembly.ca.gov/content/joint-hearing-women-and-minority-owned-businesses.