What If Small Businesses AREN’T Good?
Here’s a fairly popular idea that spans the entire political spectrum: Supporting local small businesses is basically a one-stop solution for many economic woes. Its use is so common in political debates and legislative talks that pretty much every president is judged by it at some point. But despite the raging boner Americans have (or don’t have) for helping struggling businesses, there is an underlying reality to this that smashes this narrative apart entirely: small businesses aren’t much better than big businesses. In fact, they can often be worse.
This might seem paradoxical at first. Surely helping small businesses helps keep competition healthy and workers happy, right? Well, not exactly, and there’s data behind it, too. For example, small businesses often have worse pay, almost non-existent worker protections, more abuse, and far fewer benefits than their bigger counterparts.
One study done by the Bureau of Labor Statistics discovered that, on average, smaller employers pay significantly lower wages than larger employers, with the average weekly wage for small businesses in 2017 being $849 vs. $1,793 for big businesses. That’s no pocket change. Many small businesses also don’t offer health insurance, not wanting to shoulder the cost.
What’s worse is that workers at small businesses report abuse more often than people at large companies. A study conducted by the University of Nebraska Omaha discovered that small-business employees report abuse at almost double the rate of big firms. And unless your name is literally Satan or Jeff Bezos, this is a pretty big deal, considering that, uh, workers are people too and shouldn’t be exploited.
Think Today Was Crazy?
Wait ’til you hear about the moments in history you missed! Get a new story sent directly to your inbox every day! No ads, no videos, just your daily shot of Cracked. Sign up now!
Maybe Unemployment Benefits Don’t Cause Worker Shortages?
Back in early 2020, when unemployment benefits were extended by $600 due to the high rates of unemployment caused by the pandemic, many right-wing pundits and some liberals didn’t waste any time in denouncing this as the death of the economy and businesses. Many states cut off these extra unemployment benefits early on, citing “worker shortage.” Was there any truth behind this claim?
Well, it seems the $600 unemployment boost did not actually lead to people dropping their jobs or job search altogether but served as an important supplement. A study by Yale researchers found that the increase in unemployment benefits did not disincentivize people from work at all and that rates of employment stayed relatively the same during the period.
This runs entirely counter to the idea that when people are given a wage, that they’ll just stay home and do nothing. Of course, given that a pandemic was going on, staying home and doing nothing just might be the difference between life and death.