Study: Small businesses softened S.F. recession

Small businesses softened high unemployment rates during the recession of 2000 to 2004 by laying off a smaller percentage of workers than larger firms, according to a study released Tuesday by a small-business advocate lobbying for more representation in City Hall.

That four-year period saw the “deepest and most protracted” recession San Francisco has seen since the Great Depression, with a 16 percent loss of all jobs, according to a report prepared by noted economist Kent Sims for Cal Insurance. Scott Hauge, the head of the company, also leads the nonprofit Small Business California.

“We were less than half as likely to lay off employers as larger companies,” Hauge said at a press conference on the steps of City Hall. It was attended by Supervisor Chris Daly, a representative for Mayor Gavin Newsom and representatives for several small-business organizations.

Companies with fewer than 100 employees laid off 10 percent of their staff during the period, while larger employers let go of more than 20 percent of theirs, according to the study. In 2003, small-business layoffs appeared to generate 21 percent of the negative employment and earnings effects in San Francisco, while larger businesses were responsible for the rest, the study suggests. It lists the use of family members as employees and the inability of small businesses to function with fewer staff members as possible reasons these companies kept their workers.

Stephen Cornell of Brownies Hardware on Polk Street said he did not lay off workers during the drop, though his sales figures only recently returned to their pre-recession levels. He and Hauge touted small business’s numbers — 99 percent of The City’s private businesses, 55 percent of the private work force —as they called on city government to give them more direct input on laws that affect them.

“What we want is to be is part of the process. We’re viewed as reactive … we want to be proactive,” Hauge said.

In particular, Hauge said he wants to see a small-business representative on the council that has input on the much-debated plan to provide health care for employed but uninsured San Franciscans, which was signed into law Monday. Cornell listed several city policies he’d like to see changed, from downtown parking regulations that block small commercial vehicle deliveries while allowing six-wheeler trucks, to alleged nonenforcement of small-stakes bad checks and worker’s compensation fraud.

“Who decides that your truck is better than my truck?” Cornell asked.

Newsom adviser Mike Farrah said the mayor’s office plans to use the data from the study in future legislation. The study’s figures were derived from federal Department of Commerce and California Employment Development Department data, Hauge said.

S.F. small businesses

Companies with fewer than 100 employees in The City:

» 111,674 small businesses

» 99 percent of all private businesses

» 55 percent of private work force

» 29 percent of the 99,000 jobs lost between 2000 and 2004

» $14.4 billion annual payroll in 2003

» 62 percent of small businesses are not employers (self-employed people)

— Source: “Economic Impact of San Francisco Small Businesses in the Recession — 2000 to 2004,” by Kent Sims kwilliamson@examiner.com

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