Women of color drove small business creation in 2020: RPT

Lexi Reese, Gusto COO, join Yahoo Finance’s Alexis Christoforous and Kristin Myers to discuss how small businesses are faring amid the economic recovery.

Video Transcript

KRISTIN MYERS: Welcome back. Let's chat now about the recovery of small businesses as we come out of this pandemic. We're joined now by Lexi Reese, Chief Operating Officer of the payroll and management software company Gusto. Lexi, thanks so much for joining us today. So let's just start off with how small businesses are doing right now. I feel like we constantly are talking about how the economy is recovering, and in fact is actually heating up. So how are small businesses faring at this point in time as we come out of this pandemic?

LEXI REESE: Thank you so much for having me. Gusto, as you said, manages payroll, health insurance, and financial benefits-- everything HR for over 1 million Americans that work at over 100,000 small businesses in the US. And the reality is the economy is sick. The jobs report that just came out shows 266,000 jobs created in April. That is so much less than what was forecasted, which was about 1 million jobs.

But the positive news is the cure lies in funding the 98% of businesses in the US that have 500 employees or less, because they are the engine that is creating jobs. And there is a path to making life easier for them to do just that.

ALEXIS CHRISTOFOROUS: Lexi, what about the help that the government has been able to extend to these small businesses? What are you hearing from these folks? Are they starting to get back on their feet? Have they been able to access the latest round from the stimulus package a few months ago?

LEXI REESE: So the part of the stimulus that has the most attention from small business owners is the Paycheck Protection Program. And there's been three releases of aid that effectively said this is aid that is very-- very much like a grant to businesses who keep Americans employed and getting paid. But that aid has run out. It is effectively gone. So small businesses are not able to access it anymore. And the people that are most impacted by that are women and people of color, who are creators of 50% of new businesses in the last year. That's really important, 50% of businesses created in the last year by women and women of color.

And why does that really matter? It matters because 40% of female workers dropped out of the workforce after the pandemic started to take care of their kids. But women do what women always do, which is not just say, I'm going to survive. I'm going to thrive. So many women started new businesses. Ashlie Ordonez is one of them. Ashlie created The Bare Bar in Atlanta. Ashlie sold her home and her wedding ring, putting herself and her family of five kids and her amazing husband in a precarious position, simply because she needed to fund her business, which kept her workers employed and helped them to find child care.

Ashlie is a great example of someone who was left out of all the stimulus that the government provided. Why? Because there was this little marker that you had to create your business before February 15, 2020 to have access to the Paycheck Protection plan funds. So let's just walk through the logic. The logic is, we didn't have any control over the pandemic, so we created a stimulus package to stimulate the engine of the economy that we all recognize is small businesses. Small business owners are doing exactly that.

But because they didn't start after February 15-- which presumes that anyone could have known anything about the pandemic-- they don't get access to this aid. And the fact that women and people of color are the people that created the businesses after February 15 that are keeping our economy running-- it just puts them at a huge disadvantage, which is a disadvantage for generations.

KRISTIN MYERS: So how then, Lexi, can we better support some of those women and some of those women of color in their businesses to ensure that their businesses don't just survive, as you were mentioning through this, but actually go on to thrive, especially considering how important they are economically to the health of our economy, to the creation of jobs, et cetera?

LEXI REESE: And to the solution for child care and health care in a post-pandemic reality for Americans, because these businesses are doubling the amount of child care and health provisions that they're giving to their workers. So the solution is quite simple. We need to refund the Paycheck Protection Program. We need to lift the requirement that you had to start your business after February 15. And we have to do everything in our power to recognize that while we don't have a cure for COVID-19 from a health perspective, we actually do from an economic perspective. And that is just being sensible-- not just with the amount of aid that we give, but with the quality of the programming.

And I really-- I think it's really important for folks to keep in mind, some things are complex. This is not. If you're using a platform like Gusto or any other digital provider-- which most small businesses are-- if the requirement is, did you or did you not keep your workers getting paid, did you or did you not give them health benefits, you know that with a digital system. So public-private partnerships that really just help speed up the ability to get aid to the people who need it most-- and ensure that they're doing with that aid what it's intended to do, which is bring our economy back to health-- is easy. And that's the answer.

KRISTIN MYERS: All right. Chief Operating Officer at Gusto, Lexi Reese. Thank you so much for joining us today.