He indicates that as the economy recovers, which of these changes that will “stick” will become clearer. Haltiwanger notes that some substantial restructuring caused by the pandemic will occur, particularly in retail trade and accommodation and food services, sectors in which existing small businesses have experienced large declines during the pandemic. This finding reflects another continuation of a trend: the shift toward ecommerce, with small businesses now selling goods and services online instead of renting a storefront. While the surge in new business applications was “uneven across sectors,” the largest increases were in the nonstore retail sector (alone accounting for 1 out of every 3 new businesses formed during the pandemic) and the personal services sector. Department of Labor (DOL) administers and enforces some of the nation’s most comprehensive federal labor laws. The Wage and Hour Division (WHD) of the U.S. Haltiwanger notes that whether these new businesses will drive job creation remains to be seen, with the increase in new employer businesses emerging within 4 to 8 quarters of the date of the applications according to historical patterns. Owning a small business or creating a new business brings many responsibilities, including compliance with various federal labor and employment laws. However, the increase in applications is likely for both employers and nonemployers. Haltiwanger indicates that, for 2020, much of the nonemployer activity reflects supplemental and stopgap activity. While there’s some debate about what is big versus what is small, consider 50 employees or less to be a small business. For example, applications for likely nonemployers increased nonemployer businesses have been increasing over the last 15 years as employment in the gig economy has increased. The analysis highlights how the pandemic may be accelerating ongoing economic trends. The author suggests that as more economic data become available, more small businesses, in total, may have been created during a recession and global pandemic. the highest by far compared to all years for which the data have been available.” Further, “the increase from 2019 to 2020 in total applications exceeds 20 percent which is double the growth rate in any other year.” After a dip in the first half of the year, the entirety of the increase in applications occurred in the last 6 months of 2020 and has continued through May 2021. According to the aforementioned data, out of the 33.2 million small businesses, 27.1 million are run by a single owner and have no employees. Revenue numbers range from 1 million to over 40 million. Over 8 out of 10 small businesses have no employees. Employment numbers of small businesses range between 100 and 1,500 employees. According to Haltiwanger’s analysis, 2020 was a record year for new business formation, with “the total number of applications in 2020. Some industries are considered small businesses when they employ fewer than a certain amount of people, while others are considered small when they make less than a certain amount of revenue.
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