Minnesota’s Economic News — W/E 10/15/21
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It has been two months since the death of George Floyd. While rioters were burning some businesses, owners of some establishments seemed not to worry. “Burn up my business”, they said, “businesses can be rebuilt, but justice needs to be served”. Turns out it is not so easy for small businesses to rebuild.
Two months after people sought to “dismantle” the oppressive capitalistic system, businesses are rebuilding. But in the midst of this rebuilding, a trend can be seen; most of the rebuilding is being done by big companies like Speedway and Target. Small businesses have remained torched up and boarded. And most small businesses are waiting for assistance from the state in order to rebuild.
If nothing else, what the coronavirus pandemic has shown more than anything is just how financially fragile small businesses are. Small businesses have very little cash on hand. Most of them pay their expenses as they go and they do not accumulate a lot of savings. This is especially mostly true for businesses in the service industry, like restaurants.
It should therefore not be surprising that most of them can’t rebuild without outside help. Small businesses depend on their revenues. Without active cash flow, they have nothing else. What makes this worse is that businesses have nothing to capitalize on. And additionally, these are economically stressful times. So businesses were already not doing much better in the weeks leading up to the riots.
The inability of small businesses to recover will spell trouble for low-income individuals and their neighborhoods. Small businesses, as research continues to show, are the backbone of the economy. They are the drivers of job creation as well as job growth. These are the benefits that most torched up areas of Minneapolis will miss for the foreseeable future.
Due to the nature of economic growth and the ability for businesses or income to build upon one another, this loss will compound for the foreseeable future. If small businesses fail to rebuild, it will be hard for these areas to attract other businesses, high-income workers, and potentially innovative services that accompany growth. It will take a long time for the area to catch up to these benefits due to the compounding effect.
Furthermore, the uncertainty surrounding the Minneapolis Police Department will certainly not help the situation. It is quite possible that businesses that have money to rebuild may hesitate to re-invest their money in a business they are not sure will be protected. This is bound to set affected communities back for a long time and reduce chances for future progress.