While the stock market rages higher and many start the talk about a V-shaped recovery, we are starting to see the impact of the COVID-19 economically.
Few take the time to think through the implications of what is taking place. While big business gets the headlines, smaller businesses are suffering. After all, when was the last time you heard about the closing of a dry cleaners or hair salon on CNN or CNBC?
Many are starting to ponder the impact on colleges across the nation. As we start to near the new school year, many are questioning what moves the colleges will be made.
Some are already considering making students live on campus. The thought is that schools could better isolate the students against outside contact. However, is this going to be a successful approach?
College towns across the country were hammered with the shut down in March. The remaining school year was cancelled. This put a hurting on most of the small businesses who depend upon students, faculty, and the visiting parents.
The Spring visitation season was cancelled with students enjoying virtual tours. These weekends usually bring in perspective students along with their parents, giving a burst to the economy.
What is sad is most of the towns are based around the colleges. It is not uncommon for 15%-25% of the local economy being made up by the universities. There is a secondary impact of the local governments having to lay off people as tax revenues are hitting a wall.
Even if school does open in the fall, some of the biggest money makers are related to the sporting events. A college football game can bring in tens of thousands of fans, all of them spending money locally.
Again, most of these services provided are by small businesses and the loss of revenues after the shut down would be fatal.
It is good to remember that most small business owners have to personally guarantee loans so a bankruptcy does not lead to bounce back.
Wall Street likes to focus upon the big news while overlooked what could be clear to everyone outside that small circle. Small business employs a large percentage of the workforce. When you consider all the bars, restaurants, motels, and other assorted shops in small towns, the numbers start to add up.
The sad truth is the colleges are often the largest employers in their towns. Any drop in their revenue stream means it is felt throughout the entire community.
We saw the impact on towns when the largest employer goes under. During the change in the manufacturing sector, many towns saw their local economies devastated as plants such down. Could we see the same thing play out if universities around the country start to fail on a large scale?
This is a story Wall Street completely overlooks. Yet it could have enormous impacts on hundreds of cities across the country.
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