There were 40 percent fewer small businesses in Tennessee as of June 2021 than before the pandemic, according to a report released late last month by the Sycamore Institute.
The report, “Covid Recession: Tracking Tennessee’s Economic Recovery to Date,” notes that before the pandemic, small businesses accounted for 99 percent of employment and 66 percent of total wages in the state. But the pandemic caused a steep drop in the number of small businesses.
Although Tennessee experienced a historic surge in filings for new small businesses in early 2021, that didn’t offset the overall decline in small businesses during the pandemic.
Small businesses in the leisure and hospitality industries were hit the worse, according to the report.
Still, Tennessee’s decline in small businesses remains less than the 48 percent decrease nationwide.
The report also found that Black Tennesseans, younger adults, and women were more likely to report economic hardship due to the pandemic.
In November, Black Tennesseans were 5 percentage points more likely than white residents to report having less money and 10 points more likely to report having trouble paying for bills, housing, and groceries.
Additionally, the report noted that women have been more vulnerable to the pandemic’s economic effects, as they are more likely to work in the industries hit the hardest by the pandemic.
Those working in low-income positions faced the highest number of job losses. Employment for jobs paying less than $27,000 a year have still not returned to pre-pandemic levels.
The unemployment rate, which soared to 16 percent in April 2020, has fallen to just under 5 percent as of June. This is just one percentage point higher than February 2020. Meanwhile, the national unemployment rate was 2.4 percentage points higher in June than it was before the pandemic.
Though Tennessee has largely recovered from the economic effects of the pandemic, the report foresees another surge in Covid-19 cases could slow down or reverse the state’s economic gains.
Justin Fox Burks