Big Business Has All the Advantages in the Pandemic

Even if fiscal stimulus is successful in getting the U.S. economy back on stable ground after the Covid-19 crisis, the economy will inevitably be transformed. When it comes to the labor market, despite the best efforts of policy makers to help small businesses, we're likely to see employment shift to larger companies, accelerating a trend that's been in place for several years.

Although both small and large businesses increased their workforces coming out of the 2008-09 financial crisis, in recent years there's been a growing divergence between the two types of employers. Since the end of 2017, companies with up to 49 workers have seen employment grow by just 130,000. Meanwhile, companies employing at least 1,000 workers have added 2.6 million employees. A prime reason for this has been the tightening labor market for service workers, with bigger businesses having an easier time increasing pay and benefits to attract people in an intensifying fight for talent. Starbucks, with billions of dollars in profits, has an easier time offering high wages and paying for workers' college education than a local coffee shop with fewer economies of scale and where a stroke of bad luck could mean having to shut down.