EFFECTS OF THE PANDEMIC & MAINE’S RESPONSE
A survey conducted by the Bureau of Labor Statistics from the beginning of the pandemic in March through the end of September 2020 asked employers all over the country how 2020 affected their operations and workforce. Maine’s results were largely consistent with national trends on how many businesses were forced to close by government mandate (16-18%) and those who had difficulties shipping goods during the pandemic (11-12%), but differed slightly when measuring supply and demand.
More than 40% of Maine businesses reported experiencing “a shortage of supplies or inputs,” slightly exceeding the national average of 36%. Only three states had higher reported shortages. This may be balanced out by the higher-than-average reports of those who experienced demand increases over the pandemic. More than 18% of Maine businesses reported increased demand, the most in the country.
As a result of the pandemic and government responses in 2020, Yelp estimated in September that 60% of U.S. small businesses that closed by the end of August would not reopen, a national total likely exceeding 100,000 businesses. This rate is very likely to be higher for those businesses which rely on a robust summer tourist season to make a profit and pay employees, investors, and creditors. Those firms largely operate on thin margins and cannot make up losses as easily as other sectors. Small businesses make up over 99% of the Maine economy, and employ over 56% of the workforce. Applying Yelp’s findings to the BLS survey results, Maine Policy estimates that up to 9% of Maine businesses closed in 2020.
There are some positive indicators as well. Census data show that business applications in Maine are up over 9% year-over-year from Q4 2019 to 2020. Official state data on changes in business designations are only released in January of every year. Those show the number of active Maine businesses grew by over 6,000 from 2020 to 2021. This signifies that entrepreneurs are beginning to reorganize and reorient their resources to more valuable uses. Overall, applications have been rising steadily in Maine since 2016 and seem to be returning to their pre-pandemic pace, after the uncertainty of the 2020 spring and summer.
Weekly data show that “non-store” or online retailers made up nearly 12% of all business applications filed nationwide in 2020, showing a tendency for many entrepreneurs to look to the virtual space for their next endeavor. Non-store retailers made up more than 71% of all retail business applications. Non-store retail employment in Maine has been on a steady decline since its peak in 2006, but the economic shakeup from the pandemic and resulting surge in online business applications could help Maine buck that trend.