House Labor and Commerce Committee Nolan Klouda April 23, 2020 1
A perfect economic storm? 2
Most Vulnerable Sectors (jobs) 3 Source: Alaska DOL&WD. Employment for April, 2019
March UI Claims by Sector 4 Source: Alaska DOL&WD. Employment for March, 2020
The Latest Research on Small Biz ● Published April, 2020 ● Survey of 5,800 US small businesses ● Most extensive look at COVID impacts to small businesses to date 5
Small businesses are going broke ● 43% of businesses are currently closed ● Employee counts reduced by 40% on average ● $10,000 in median monthly expenses ● Less than one month of cash in hand Source: Bartik et al, 2020 6
Likelihood of remaining open after 4 months 7 Source: Bartik et al, 2020
Likelihood of remaining open after 4 months Source: Bartik et al, 2020 8
Economists: Stay the course “A comprehensive policy response to the coronavirus will involve tolerating a very large contraction in economic activity until the spread of infections has dropped significantly.” Source: IGM Economic Experts Panel 9
CARES small business relief Paycheck Protection Economic Injury Disaster Program (PPP) Loan (EIDL) • 4,800 AK loans • 1,600 loan advances • About $190K average • $4,600 average loan advance (grant) 10
CARES relief challenges ● “Conduit” issues and volume ● Lenders and access ● Focused on payroll for forgiveness ● Debt repayment concerns ● Not suited well to seasonal businesses ● Quickly depleted 11
Our recommendation: grants 12
Economic development network 13
• • Juneau Economic Development Council* DCCED • • Anchorage Economic Development Alaska Small Business Development Corporation* Center* • • Fairbanks Economic Development Alaska Manufacturing Extension Corporation* Partnership* • • Fairbanks North Star Borough Center for Economic Development* • • Southeast Conference* UAA Business Enterprise Institute* • • Haines Economic Development Denali Commission • Corporation* US Economic Development • Kenai Peninsula Economic Development Administration • District* Foraker Group • Prince William Sound Economic Development District* • Kawerak *=signed letter recommending grants • Association of Village Council Presidents • Southwest Alaska Municipal Conference* Members 14
The University role 15
Thank You! 16
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