V-shaped. L-shaped. The Nike “swoosh.” Which Roman letter or corporate logo best models the path of the post-pandemic recovery has been hotly contested by analysts and executives on Wall Street. For small business owners struggling to pay their bills, let alone their employees, the debate might as well take place on Mars. For them the geometry of the future is binomial: survive, or don’t.
Certainly that is the case for many small businesses in Alaska. It is by now a sobering truism that the damage done by COVID-19 to the economy, and to the labor market in particular, is unprecedented. Less recognized is the destruction’s potential permanence. The fourfold shock of temporary closures, mass layoffs, low oil prices, and a summer without tourists is the kind of slow-rolling crisis that can overwhelm even the best-managed enterprise and turn hardship into calamity.
A recent survey of 253 businesses by AEDC, an Anchorage-based community development fund, highlights the extent of the turmoil. 93% of respondents said COVID-19 has disrupted business, with 30% seeing year-on-year revenues fall by half or more. 45% have made workforce reductions, including layoffs. 16% said they are at risk of closing permanently, 22% are unsure. Put another way, that’s 97 businesses that don’t know whether they will exist in a future Alaska.
This lengthy preamble is why we decided to launch the Alaska Stimulus Pledge. Inspired by similar efforts in other states, we believe Alaskans can work together to find thoughtful, innovative ways to support local businesses as the state moves to cautiously reopen parts of the economy. Our hope is that if we all agree to chip in a little, we’ll stem the losses small businesses face today and help prevent a wave of bankruptcies in the future.
To be clear, the Pledge is not a call for indiscriminate spending. Rather, it’s a personal commitment to think critically about how your decisions as a consumer impact small businesses in your community. By signing, you pledge to think about where your money is going before you shop in store or online. The ultimate goal is to keep small businesses from going under. Cultivating thoughtfulness, as opposed to complacency, is required.
Take the federal stimulus check, for example. Under the CARES Act, Alaskans will receive (if they have not already) up to $1,200 in direct aid from the Treasury Department. For many, this money will go to cover essentials like groceries or rent. Others will use it for discretionary purchases. But consider how that money could be used to support local businesses, such as buying vegetables from a neighborhood farm or getting your car’s oil changed at a local mechanic’s shop. We challenge those who are able to set aside a portion of their stimulus check (be it $5, $50, or $500) to spend at a local business.
Imagine the impact if 5,000 Alaskans accept our challenge. If they spend $200 on average, $1,000,000 in direct revenues would go to local businesses. Through what economists call the multiplier effect, aggregate spending would actually be greater than $1,000,000, as businesses and their employees would in turn spend part of the money they receive at other businesses.
The discussion thus far has been all about small businesses. But we’d be remiss not to talk about COVID-19’s impact on local nonprofits, particularly those providing services for our community’s most vulnerable members. From the beginning, nonprofits have been on the front lines fighting the pandemic. Shelters like Bean’s Cafe, Clare House, and AWAIC have taken extraordinary steps to continue operating. Food pantries like Salvation Army Alaska and the Food Bank of Alaska have grappled with surging demand.
All will be critical in the months ahead. That’s why we’re asking those who sign the Pledge to support local nonprofits, too. Again, critical thinking is key. Cash, as they say, is king. But there are other ways to give. If you’re cleaning out a closet, give unused coats to a shelter. If you overstocked your pantry with ramen (or whatever you panic bought in March), donate it to a food pantry. In doing so, you’ll help a local nonprofit keep the lights on, doors open, and services running.
Now for one last quip about geometry: what shape the post-pandemic recovery takes matters less than its inherent properties. V-shapes and L-shapes are important for those grappling with monetary policy and impersonal markets. But for Alaskans, particularly small business owners and nonprofit leaders, the future rests on whether or not we invest in the intangibles: thoughtfulness, compassion, and hope for a better tomorrow.
So how about it, Alaska?
To sign the Alaska Stimulus Pledge, go to www.stimulus-for-alaska.com/sign-the-pledge
Taylor Drew Holshouser was born and raised in Eagle River. He is a graduate of Eagle River High School and Yale University.
Jackson Blackwell was born in Sitka and grew up in Soldotna. He is a graduate of Soldotna High School, a rising senior studying Economics at Boise State University, and a recently named Truman Scholar.