11 ms·

One of the more worrying things to me is how this pandemic (and/or our response to it) will disproportionately affect small businesses and individuals. As Amazo

One of the more worrying things to me is how this pandemic (and/or our response to it) will disproportionately affect small businesses and individuals. As Amazon hires 100k workers how many jobs are being lost by small businesses failing?

taurath 7y ago
Amazon is now the only store open. This will clearly accelerate the death of retail, to the point that I'm not even sure it will survive. We must have a rent holiday if those businesses and their workers are to survive.
- WalterBright 7y ago
  > We must have a rent holiday if those businesses and their workers are to survive. We'll get a lot of rent forgiveness naturally. If a strip mall has some tenants who cannot make rent in this crisis, who are they going to get who can pay? The pragmatic approach is to keep your existing tenants, because their survival is your strip mall's survival.
  - michaelt 7y ago
    A cynical, calculating strip mall landlord might think they're more likely to get a government cash handout (or a cash handout to their tenants who then hand it to them, which is effectively the same thing) if they prove their tenants will go bankrupt without it.
    - WalterBright 7y ago
      It simply does the landlord no good at all to evict them.
  - taurath 7y ago
    Will that happen for housing? The businesses will lose all their workers during that time, and everyone will go work in an amazon warehouse.
  - fiblye 7y ago
    We might get a lot, but it likely won’t be enough. Many land owners would already prefer to leave their buildings empty for years over even considering negotiating on rent. I doubt anything can change their minds.
    - social_quotient 7y ago
      It’s odd but really true. Does anyone have insight why this is the case?
      - Kluny 7y ago
        According to Strong Towns, it's because the building can borrow money based on the projected value of rent. If they lower the rent, they can't borrow as much money. https://www.strongtowns.org/journal/2017/11/27/the-paradox-of-persistent-vacancies-and-high-prices https://www.strongtowns.org/journal/2017/11/27/the-paradox-o...
      - opportune 7y ago
        At an aggregate level it can make more sense to leave X% of units vacant than to lower prices (which could have effects on the rate you can charge with the rest of your units). I think it’s an example of our financial system not working as intended. For example let’s say I have a 100 unit apartment building. If I maintain a 20% vacancy rate target I can charge an average of $1000/mo/unit. But to set a price at which my vacancies get filled very quickly, to hit a 5% vacancy rate, maybe I need to charge $700/mo/unit. In that case I’m making less money than before - $80k/mo vs $66.5k/mo.
        leetcrew 7y ago
        why wouldn't you just price discriminate through short-term concessions to fill the remaining 20% and increase revenue? this seems to be what most apartment buildings around me actually do.
        opportune 7y ago
  - tomatocracy 7y ago
    If you think the mall won't survive anyway, then this calculation changes though and instead you look to recoup as much as you can in the short term. Ordinarily this is a good thing because it forces unviable businesses to cease trading and the people and resources can be redeployed into something more productive (and in many countries at an individual level the people will receive help from the government to do this without ruining their lives). The idea here is to minimise the long term damage caused by people being forced into liquidation as a route to recoup losses and increase protection for individuals who are also temporarily affected.
- VectorLock 7y ago
  >Amazon is now the only store open. I've had Amazon Fresh cancel two orders so far so I'm not sure how open they are.
  - vonmoltke 7y ago
    I can't even place an Amazon Fresh order right now, and the earliest Peapod delivery date I can get is 28MAR.
    - sjg007 7y ago
      It's kind of strange to see a complete breakdown in online ordering and delivery of groceries. Target etc... basically shut down curbside delivery because they need people to restock shelves. That means you have to visit the store. Odd. I expect to see grocery only delivery companies really take shape soon (like Instacart).
- prostoalex 7y ago
  Which area are you in? Every large retail store is open (so far) in Southern California, with most retailers' inventory being purchased at full retail prices. I am not sure why the retailers don't switch to curbside-pickup model exclusively, instead preferring hordes of customers roaming around every single morning, but from what I hear, Instacart and store-specific delivery programs are overwhelmed.
  - asdff 7y ago
    They are open in Southern California, but running out of basics fast. I noticed a complete lack of certain produce, milk, eggs, bread, as well as the oft meme'd paper products. Every morning I go to the grocery store in my neighborhood looking for toilet paper and every morning there is some new staple nearly out of stock. I still have a few rolls left, and amazon seems to have a few remaining in stock, so things aren't dire yet, but they are getting concerning. This is also a city where not too long ago the social contract evaporated after hearing a verdict, requiring military intervention to restore order. An armed militia formerly stood on the roof of the store I scoured today for toilet paper. I'm fearful of what will happen when everyone realizes they can no longer wipe their ass or buy rice and the working class starts getting laid off en masse, and when this virus starts ravaging the 150k+ homeless in southern california.
    - taurath 7y ago
      Thus far the consumables supply chain in the US hasn’t been too badly effected. They’re doing thanksgiving or more amounts of business every day here in Seattle but they’re mostly keeping up. Whether we as a nation rip ourselves apart is on each of us as individuals to make that not happen.
      - vonmoltke 7y ago
        Grocery stores in my part of northern New Jersey are not keeping up, at the moment. On Saturday I was unable to buy fresh meat (of any kind), sausage (without cheese in it), flour, pasta, or canned beans. Produce pickings were slim, and most items were sold out. Ditto canned soup and bread. That's just the things I was actually looking for; there were plenty of other bare shelves throughout the store.
- fragmede 7y ago
  That's not true. at the very least, Walmart is open, does deliveries, and doesn't charge a monthly fee, unlike Amazon Prime!
WalterBright 7y ago
Marginal businesses of any size are going to fail, and the less marginal will become marginal. Larger businesses have a proportionately larger need for money to sustain themselves. Big business doesn't mean rich business. Look what's happening to the airlines.
- reaperducer 7y ago
  You mean like American Airlines that had a profit of $7.6 billion in 2015, and didn't save dollar one for a rainy day? Instead, it bought back $15 billion worth of stock over six years while raising fees and shrinking seats? “I don’t think we’re ever going to lose money again,” -Doug Parker, American Airlines CEO, 2017. Let 'em fail.
  - _jal 7y ago
    Letting them all fail would do more harm to others than warranted. But letting the weakest one fail as a warning to the others that the bailouts are over and perhaps they should learn to save against rainy days isn't the worst idea.
    - bigfudge 7y ago
      If they fail and there’s a market for flights their assets will be bought and operated by someone else. Let them fail. Given climate change, air travel is not a public good we should be prioritising.
    - reaperducer 7y ago
      Letting them all fail would do more harm to others than warranted. "Too big to fail?" We fell for that once before.
      - missedthecue 7y ago
        ...and it was true then
    - michaelchisari 7y ago
hadlock 7y ago
About one third of small businesses were dead and buried by midnight Sunday.
reaperducer 7y ago
At least the airlines will get another bailout, after selfishly spending billions on stock buybacks while shrinking seats and hiking fees. Meanwhile, Joe Average, who ended up running a food truck when Wells Fargo "right sized" him during the last recession, will find a comfortable slab of concrete upon which to rest his head, under the viaduct.
- parhamn 7y ago
  > after selfishly spending billions on stock buybacks I've been seeing this on twitter a lot. Is there some context you can provide for why these particular repurchases were in bad taste, given no awareness of the upcoming pandemic. I am assuming you don't view repurchases as 'selfish' generally.
  - rcxdude 7y ago
    I think the main thing is the airline industry is boom and bust, while being quite sensitive to a number of factors out of their control, but because they know they'll get bailed out by the public they have no reason to try saving to make their business robust against such things on their own. These talking points seem to be coming from this article: https://www.nytimes.com/2020/03/16/opinion/airlines-bailout.html https://www.nytimes.com/2020/03/16/opinion/airlines-bailout....
  - totalZero 7y ago
    A buyback is a form of capital return to shareholders. Improvements in leg room, amenities, services, infrastructure, etc, are a form of capital return to customers. When executive compensation is tied to operating profit or market capitalization, there is an incentive to reduce the product quality (the air traveler experience, in this case) to the minimum competitive level and boost the share price. A buyback boosts the share price in two inter-related ways. First, it reduces the amount of shares available in the secondary market (the "float"), which distributes the market cap across a smaller number of shares. Second, it provides artificial demand for the stock, impacting the price upward by buying shares. Warren Buffett has stated that he likes investing in equities in part because companies reinvest their profits in their business. A buyback doesn't do that because when you spend $5B on your own stock, you're not spending it on providing a better experience to your customers, and you're not spending it on R&D. You're just spending it on concentrating shareholder ownership and driving up the stock price. Guess who often gets paid in shares? Executives. It's common for a CEO to get a small portion of his compensation as salary and a large portion as shares and options. The point is that these companies could have reinvested that money in their business, but instead they aimed to boost share price and financial optics. That's not to say the airlines don't care about the little guy. Some shareholders are regular folks. Plus, at least Delta paid out a bonus to employees a few months ago. But there is indeed a reason to dislike large buybacks.
ucarion 7y ago
Perhaps an equivalent as in France could help? Macron has stated that no company, regardless of size, will go under merely as a result of this crisis. To that end, any French company at risk of going under will be allowed to stop paying rent and taxes during the shutdown. https://translate.google.com/translate?hl=en&sl=fr&u=https://www.lefigaro.fr/societes/coronavirus-macron-promet-qu-aucune-entreprise-ne-sera-livree-au-risque-de-faillite-20200316&prev=search https://translate.google.com/translate?hl=en&sl=fr&u=https:/...
- yahyaheee 7y ago
  Such a simple and reassuring answer, why can’t we have that in America?
  - opportune 7y ago
    Just to play devils advocate... this has the potential to cause an absolutely massive liquidity crunch. All debt is an asset - all payments on debt are a positive number in some investment portfolio/banks/etc balance sheets (eg a bond). If everybody stopped paying debts and rent, the financial industry could crash overnight as suddenly nobody has the cash flow to pay each other any more. And that would trickle down immediately - not only as banks and property management groups go out of business, but in property tax revenues, pensions, people on fixed incomes, and then all the second and third order effects: insurance and reinsurance, massive market panics, etc. It sounds nice on an individual basis but the risk is insanely huge
    - ksec 7y ago
      I agree but I see this as a problem we could fix using financial tools. Rather than letting thousands if not millions of small business and jobs completely gone.
      - opportune 7y ago
        Or face a total financial system meltdown if the fix is poorly implemented. I think the simplest solution is for the fed/government to simply give everybody cash, since the root of the problem is that a lot of people have temporarily lost their incomes due to their jobs being essentially banned in response to the pandemic (eg a lot of people in retail outside of supermarkets/food). Anything that involves nonpayment is extremely risky
bpfrh 7y ago
Depends, in austria you have different laws and measures for one person companies to bigger companies.

taurath 7y ago

Amazon is now the only store open. This will clearly accelerate the death of retail, to the point that I'm not even sure it will survive. We must have a rent holiday if those businesses and their workers are to survive.

WalterBright 7y ago
> We must have a rent holiday if those businesses and their workers are to survive. We'll get a lot of rent forgiveness naturally. If a strip mall has some tenants who cannot make rent in this crisis, who are they going to get who can pay? The pragmatic approach is to keep your existing tenants, because their survival is your strip mall's survival.
- michaelt 7y ago
  A cynical, calculating strip mall landlord might think they're more likely to get a government cash handout (or a cash handout to their tenants who then hand it to them, which is effectively the same thing) if they prove their tenants will go bankrupt without it.
  - WalterBright 7y ago
    It simply does the landlord no good at all to evict them.
- taurath 7y ago
  Will that happen for housing? The businesses will lose all their workers during that time, and everyone will go work in an amazon warehouse.
- fiblye 7y ago
  We might get a lot, but it likely won’t be enough. Many land owners would already prefer to leave their buildings empty for years over even considering negotiating on rent. I doubt anything can change their minds.
  - social_quotient 7y ago
    It’s odd but really true. Does anyone have insight why this is the case?
    - Kluny 7y ago
      According to Strong Towns, it's because the building can borrow money based on the projected value of rent. If they lower the rent, they can't borrow as much money. https://www.strongtowns.org/journal/2017/11/27/the-paradox-of-persistent-vacancies-and-high-prices https://www.strongtowns.org/journal/2017/11/27/the-paradox-o...
    - opportune 7y ago
      At an aggregate level it can make more sense to leave X% of units vacant than to lower prices (which could have effects on the rate you can charge with the rest of your units). I think it’s an example of our financial system not working as intended. For example let’s say I have a 100 unit apartment building. If I maintain a 20% vacancy rate target I can charge an average of $1000/mo/unit. But to set a price at which my vacancies get filled very quickly, to hit a 5% vacancy rate, maybe I need to charge $700/mo/unit. In that case I’m making less money than before - $80k/mo vs $66.5k/mo.
      - leetcrew 7y ago
        why wouldn't you just price discriminate through short-term concessions to fill the remaining 20% and increase revenue? this seems to be what most apartment buildings around me actually do.
        opportune 7y ago
- tomatocracy 7y ago
  If you think the mall won't survive anyway, then this calculation changes though and instead you look to recoup as much as you can in the short term. Ordinarily this is a good thing because it forces unviable businesses to cease trading and the people and resources can be redeployed into something more productive (and in many countries at an individual level the people will receive help from the government to do this without ruining their lives). The idea here is to minimise the long term damage caused by people being forced into liquidation as a route to recoup losses and increase protection for individuals who are also temporarily affected.
VectorLock 7y ago
>Amazon is now the only store open. I've had Amazon Fresh cancel two orders so far so I'm not sure how open they are.
- vonmoltke 7y ago
  I can't even place an Amazon Fresh order right now, and the earliest Peapod delivery date I can get is 28MAR.
  - sjg007 7y ago
    It's kind of strange to see a complete breakdown in online ordering and delivery of groceries. Target etc... basically shut down curbside delivery because they need people to restock shelves. That means you have to visit the store. Odd. I expect to see grocery only delivery companies really take shape soon (like Instacart).
prostoalex 7y ago
Which area are you in? Every large retail store is open (so far) in Southern California, with most retailers' inventory being purchased at full retail prices. I am not sure why the retailers don't switch to curbside-pickup model exclusively, instead preferring hordes of customers roaming around every single morning, but from what I hear, Instacart and store-specific delivery programs are overwhelmed.
- asdff 7y ago
  They are open in Southern California, but running out of basics fast. I noticed a complete lack of certain produce, milk, eggs, bread, as well as the oft meme'd paper products. Every morning I go to the grocery store in my neighborhood looking for toilet paper and every morning there is some new staple nearly out of stock. I still have a few rolls left, and amazon seems to have a few remaining in stock, so things aren't dire yet, but they are getting concerning. This is also a city where not too long ago the social contract evaporated after hearing a verdict, requiring military intervention to restore order. An armed militia formerly stood on the roof of the store I scoured today for toilet paper. I'm fearful of what will happen when everyone realizes they can no longer wipe their ass or buy rice and the working class starts getting laid off en masse, and when this virus starts ravaging the 150k+ homeless in southern california.
  - taurath 7y ago
    Thus far the consumables supply chain in the US hasn’t been too badly effected. They’re doing thanksgiving or more amounts of business every day here in Seattle but they’re mostly keeping up. Whether we as a nation rip ourselves apart is on each of us as individuals to make that not happen.
    - vonmoltke 7y ago
      Grocery stores in my part of northern New Jersey are not keeping up, at the moment. On Saturday I was unable to buy fresh meat (of any kind), sausage (without cheese in it), flour, pasta, or canned beans. Produce pickings were slim, and most items were sold out. Ditto canned soup and bread. That's just the things I was actually looking for; there were plenty of other bare shelves throughout the store.
fragmede 7y ago
That's not true. at the very least, Walmart is open, does deliveries, and doesn't charge a monthly fee, unlike Amazon Prime!

WalterBright 7y ago

Marginal businesses of any size are going to fail, and the less marginal will become marginal. Larger businesses have a proportionately larger need for money to sustain themselves. Big business doesn't mean rich business. Look what's happening to the airlines.

reaperducer 7y ago
You mean like American Airlines that had a profit of $7.6 billion in 2015, and didn't save dollar one for a rainy day? Instead, it bought back $15 billion worth of stock over six years while raising fees and shrinking seats? “I don’t think we’re ever going to lose money again,” -Doug Parker, American Airlines CEO, 2017. Let 'em fail.
- _jal 7y ago
  Letting them all fail would do more harm to others than warranted. But letting the weakest one fail as a warning to the others that the bailouts are over and perhaps they should learn to save against rainy days isn't the worst idea.
  - bigfudge 7y ago
    If they fail and there’s a market for flights their assets will be bought and operated by someone else. Let them fail. Given climate change, air travel is not a public good we should be prioritising.
  - reaperducer 7y ago
    Letting them all fail would do more harm to others than warranted. "Too big to fail?" We fell for that once before.
    - missedthecue 7y ago
      ...and it was true then
  - michaelchisari 7y ago

hadlock 7y ago

About one third of small businesses were dead and buried by midnight Sunday.

reaperducer 7y ago

At least the airlines will get another bailout, after selfishly spending billions on stock buybacks while shrinking seats and hiking fees. Meanwhile, Joe Average, who ended up running a food truck when Wells Fargo "right sized" him during the last recession, will find a comfortable slab of concrete upon which to rest his head, under the viaduct.

parhamn 7y ago
> after selfishly spending billions on stock buybacks I've been seeing this on twitter a lot. Is there some context you can provide for why these particular repurchases were in bad taste, given no awareness of the upcoming pandemic. I am assuming you don't view repurchases as 'selfish' generally.
- rcxdude 7y ago
  I think the main thing is the airline industry is boom and bust, while being quite sensitive to a number of factors out of their control, but because they know they'll get bailed out by the public they have no reason to try saving to make their business robust against such things on their own. These talking points seem to be coming from this article: https://www.nytimes.com/2020/03/16/opinion/airlines-bailout.html https://www.nytimes.com/2020/03/16/opinion/airlines-bailout....
- totalZero 7y ago
  A buyback is a form of capital return to shareholders. Improvements in leg room, amenities, services, infrastructure, etc, are a form of capital return to customers. When executive compensation is tied to operating profit or market capitalization, there is an incentive to reduce the product quality (the air traveler experience, in this case) to the minimum competitive level and boost the share price. A buyback boosts the share price in two inter-related ways. First, it reduces the amount of shares available in the secondary market (the "float"), which distributes the market cap across a smaller number of shares. Second, it provides artificial demand for the stock, impacting the price upward by buying shares. Warren Buffett has stated that he likes investing in equities in part because companies reinvest their profits in their business. A buyback doesn't do that because when you spend $5B on your own stock, you're not spending it on providing a better experience to your customers, and you're not spending it on R&D. You're just spending it on concentrating shareholder ownership and driving up the stock price. Guess who often gets paid in shares? Executives. It's common for a CEO to get a small portion of his compensation as salary and a large portion as shares and options. The point is that these companies could have reinvested that money in their business, but instead they aimed to boost share price and financial optics. That's not to say the airlines don't care about the little guy. Some shareholders are regular folks. Plus, at least Delta paid out a bonus to employees a few months ago. But there is indeed a reason to dislike large buybacks.

ucarion 7y ago

Perhaps an equivalent as in France could help? Macron has stated that no company, regardless of size, will go under merely as a result of this crisis. To that end, any French company at risk of going under will be allowed to stop paying rent and taxes during the shutdown. https://translate.google.com/translate?hl=en&sl=fr&u=https://www.lefigaro.fr/societes/coronavirus-macron-promet-qu-aucune-entreprise-ne-sera-livree-au-risque-de-faillite-20200316&prev=search https://translate.google.com/translate?hl=en&sl=fr&u=https:/...

yahyaheee 7y ago
Such a simple and reassuring answer, why can’t we have that in America?
- opportune 7y ago
  Just to play devils advocate... this has the potential to cause an absolutely massive liquidity crunch. All debt is an asset - all payments on debt are a positive number in some investment portfolio/banks/etc balance sheets (eg a bond). If everybody stopped paying debts and rent, the financial industry could crash overnight as suddenly nobody has the cash flow to pay each other any more. And that would trickle down immediately - not only as banks and property management groups go out of business, but in property tax revenues, pensions, people on fixed incomes, and then all the second and third order effects: insurance and reinsurance, massive market panics, etc. It sounds nice on an individual basis but the risk is insanely huge
  - ksec 7y ago
    I agree but I see this as a problem we could fix using financial tools. Rather than letting thousands if not millions of small business and jobs completely gone.
    - opportune 7y ago
      Or face a total financial system meltdown if the fix is poorly implemented. I think the simplest solution is for the fed/government to simply give everybody cash, since the root of the problem is that a lot of people have temporarily lost their incomes due to their jobs being essentially banned in response to the pandemic (eg a lot of people in retail outside of supermarkets/food). Anything that involves nonpayment is extremely risky

bpfrh 7y ago

Depends, in austria you have different laws and measures for one person companies to bigger companies.