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The Impact of the COVID-19 Pandemic on Business Ownership Across Racial/Ethnic Groups and Gender

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Abstract

This study examined the economic impact of the COVID-19 pandemic on US older entrepreneurs’ businesses using the Health and Retirement Study. We estimated logistic regression models to document the odds of experiencing economic impact. The COVID-19 pandemic has affected nearly 76% of US older entrepreneurs but has disproportionately impacted the businesses of Black, Hispanic, Asian/other races, and women entrepreneurs. Older Black entrepreneurs had significantly higher odds of facing business closure (OR = 2.31, p < .01), implementing new procedures (OR = 2.44, p < .01), workers quitting (OR = 2.95, p < .001), and difficulty paying regular bills (OR = 2.88, p < .001) than their White counterparts. Older Hispanic entrepreneurs also had significantly higher odds of instituting new procedures (OR = 2.27, p < .05), workers quitting (OR = 2.26, p < .01), and difficulty paying regular bills (OR = 2.35, p < .01) than their White counterparts. Similarly, older Asian/other races entrepreneurs were significantly more likely to report difficulty paying regular bills since the start of the pandemic than their White counterparts (OR = 3.11, p < .01). Women entrepreneurs were significantly more likely to close their businesses than their male counterparts (OR = 2.11, p < .001). These significant associations persisted after controlling for confounders. Support for underserved racial/ethnic groups and older women entrepreneurs should focus on accessibility to financial services, capital, and support packages as well as legislative support for ensuring business continuity and success.
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https://doi.org/10.1007/s41996-022-00102-y
ORIGINAL ARTICLE
The Impact oftheCOVID‑19 Pandemic onBusiness Ownership Across
Racial/Ethnic Groups andGender
ShinaeL.Choi1 · ErinR.Harrell2· KimberlyWatkins3
Received: 5 December 2021 / Revised: 7 April 2022 / Accepted: 5 May 2022
© The Author(s), under exclusive licence to Springer Nature Switzerland AG 2022
Abstract
This study examined the economic impact of the COVID-19 pandemic on US older entrepreneurs’ businesses using the
Health and Retirement Study. We estimated logistic regression models to document the odds of experiencing economic
impact. The COVID-19 pandemic has affected nearly 76% of US older entrepreneurs but has disproportionately impacted
the businesses of Black, Hispanic, Asian/other races, and women entrepreneurs. Older Black entrepreneurs had significantly
higher odds of facing business closure (OR = 2.31, p < .01), implementing new procedures (OR = 2.44, p < .01), workers
quitting (OR = 2.95, p < .001), and difficulty paying regular bills (OR = 2.88, p < .001) than their White counterparts. Older
Hispanic entrepreneurs also had significantly higher odds of instituting new procedures (OR = 2.27, p < .05), workers quitting
(OR = 2.26, p < .01), and difficulty paying regular bills (OR = 2.35, p < .01) than their White counterparts. Similarly, older
Asian/other races entrepreneurs were significantly more likely to report difficulty paying regular bills since the start of the
pandemic than their White counterparts (OR = 3.11, p < .01). Women entrepreneurs were significantly more likely to close
their businesses than their male counterparts (OR = 2.11, p < .001). These significant associations persisted after controlling
for confounders. Support for underserved racial/ethnic groups and older women entrepreneurs should focus on accessibility
to financial services, capital, and support packages as well as legislative support for ensuring business continuity and success.
Keywords Business closure· COVID-19· Entrepreneurship· Gender· Race/ethnicity
As of March 2022, there have been nearly 500 million
confirmed cases of COVID-19, including over 6 million
deaths worldwide. However, the devastation of this global
pandemic goes beyond grieving for those who were not
able to win their battle against the virus. The impact of the
pandemic on the livelihoods of individuals has also been
catastrophic, especially those who had no savings, became
unemployed, or faced pay cuts (World Economic Forum,
2021). According to the 2020 Global Risks Perception Sur-
vey (GRPS), working hours equivalent to 495 million jobs
were lost in the second quarter of 2020 (International Labour
Organization, 2020). As a percentage, this is essentially 14%
of the world’s workforce (World Bank Open Data, 2021).
Employment sectors most affected by social distancing
protocols were restaurants/bars, travel and transportation,
entertainment, personal services, retail, and manufacturing
(Vavra, 2020). These sectors employ relatively higher per-
centages of women, African American/Black, and Hispanic
employees (Bureau of Labor Statistics, 2020). Additionally,
reports show those most affected by unemployment due
to COVID-19 are less educated and have fewer economic
resources and liquid assets (Mongey etal.,2020). With each
state implementing varying mandates in an effort to control
the virus, states with stricter mandates for a greater length
of time may have suffered harsher consequences from an
economic business perspective.
* Shinae L. Choi
schoi@ches.ua.edu
Erin R. Harrell
erharrell@ua.edu
Kimberly Watkins
kimberly.watkins@uga.edu
1 Department ofConsumer Sciences, The University
ofAlabama, 304 Adams Hall, Box870158, Tuscaloosa,
AL35487, USA
2 Department ofPsychology, The University ofAlabama,
172A Gordon Palmer Hall, Box870348, Tuscaloosa,
AL35487, USA
3 Department ofFinancial Planning, Housing, andConsumer
Economics, University ofGeorgia, 205 Dawson Hall, Athens,
GA30602, USA
/ Published online: 25 May 2022
Journal of Economics, Race, and Policy (2022) 5:307–317
Content courtesy of Springer Nature, terms of use apply. Rights reserved.
... These findings suggested that although the threat of COVID-19 to their health was the primary concern, meeting financial obligations was also an important concern for older adults. Recent studies suggested that the COVID-19 pandemic has disproportionately impacted the communities and businesses of underserved populations such as Blacks and Hispanics (Choi et al., 2022b;Taylor et al., 2022). Middle-aged and older Blacks and Hispanics experienced more financial hardships, including difficulty paying regular bills, business closure, and job loss than their White counterparts (Choi et al., 2022b). ...
... Recent studies suggested that the COVID-19 pandemic has disproportionately impacted the communities and businesses of underserved populations such as Blacks and Hispanics (Choi et al., 2022b;Taylor et al., 2022). Middle-aged and older Blacks and Hispanics experienced more financial hardships, including difficulty paying regular bills, business closure, and job loss than their White counterparts (Choi et al., 2022b). Job insecurity during COVID-19 has been directly related to poorer mental health (Guberina and Wang, 2021;Khudaykulov et al., 2022). ...
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