Neustadter: COVID-19 is accelerating corporate consolidation

Corinne Neustadter

Editor’s Note: All opinion section content reflects the views of the individual author only and does not represent a stance taken by The Collegian or its editorial board.

Looking back, it’s hard to believe that we’re in about month nine of the COVID-19 pandemic. A new normal has emerged out of the relentless upheaval, necessitating changes in the ways we live our daily lives by adopting masks, carrying hand sanitizer and staying 6 feet apart from others.

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In the middle of this new normal, Congress has signed into law a few pieces of legislation for COVID-19 relief, including the Paycheck Protection Program and Health Care Enhancement Act in April and the CARES Act in March. This legislation was by no means perfect, but they did provide financial relief for struggling families. The CARES Act remains one of the largest financial stimulus bill in history, clocking in at over $2 trillion in funding.

However, despite this relief, the financial health of many Americans has still struggled. As a study from Columbia University reports, “The expiration of (the CARES Act’s) two major income support provisions has reversed that progress (in significantly lowering poverty levels).” 

The study’s findings signify that millions of families have fallen into poverty even since the passage of a huge relief bill such as the CARES Act, with current poverty levels higher than pre-COVID-19 levels. Across the country, millions of people are suffering.

Meanwhile, the COVID-19 pandemic has been lining the pockets of corporate giants. A report from Oxfam International found that “32 of the world’s most profitable companies are together expected to rake $109 (billion) more during the pandemic than the average of the four previous years.”

Unsurprisingly, these companies include Apple, Google, Walmart and Amazon, to name a few. Amazon alone has reported a 95% increase in profits for fall 2020 compared to previous years. 

These staggering numbers reflect how COVID-19 has accelerated the inequality crisis, perpetually increasing profits for the richest in society through altered consumption patterns while leaving the most vulnerable members of society without so much as a safety net.

The surmounting inequality crisis, paired with a pandemic, has also perpetuated a worsening crisis in American industry that necessitates government intervention. Corporate consolidation, already a worrying shift pre-COVID-19, threatens thousands of small businesses and undermines the entire economy as financial power becomes concentrated in the hands of a few dozen CEOs.

Though the CARES Act provided billions in temporary assistance to small businesses, some funds ran out in less than two weeks — and according to Ashley Harrington quoted in CBSNews in April, “Based on how the program is structured, we estimate that upwards of 90% of businesses owned by people of color have been or will likely be shut out of the Paycheck Protection Program.”

By their very nature, these programs were meant to be temporary relief for budgetary shortfalls assumed to be corrected once the pandemic ended.

“The need for government intervention on both individual and entrepreneurial levels has never been clearer.”

Seven months later, small businesses are still bearing the brunt of the pandemic. According to one Yelp report, over 160,000 businesses have shut down since March 1. This number only accounts for businesses listed on Yelp as of Aug. 31, so this number is likely an understatement for actual business closures.

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Here in Fort Collins, increasing property values and rising rents contributed to small business closures even before the pandemic — just last year, the Wild Boar Cafe, Linden Street Cafe and The Drunken Monkey all closed their doors despite their iconic statuses in FoCo.

The front of the Wild Boar Cafe on Nov. 9. The Wild Boar Cafe closed its doors for good on Oct. 30. Wild Boar is one of many restaurants that closed their doors in recent weeks. (Gregory James | The Collegian)

COVID-19 has only accelerated business closures in the City, with 12 businesses reported to close by the end of the year as of June, many locally-owned. This number is likely higher given the continual financial strain many local businesses have been hit by since June, with restaurants only allowed to have 50 people and a recent 11 p.m. last call for alcohol implemented.

Unlike national corporations, which have both the financial and technical infrastructure to shift their business online and recover from the pandemic, small businesses are left with few safety nets and limited options to continue during an intensely stressful time.

Much like many college towns in America, small businesses are an important part of Fort Collins’ economy. Old Town is paraded as a mainstay for Fort Collins tourism and is at the core of its identity. If the trend of consolidation continues without federal intervention, the inherent characters of cities across the country will be replaced with cookie-cutter corporate emblems. 

As James Kwak of The Washington Post said, “Many small businesses and weaker corporations won’t have enough capital to outlast the pandemic, and their customers will be claimed by a handful of winners with the cash and technological infrastructure necessary to survive and prosper in the new environment … We were already heading this way. The virus is bringing us there faster.”

The need for more government intervention on both individual and entrepreneurial levels has never been clearer. Historically, reversing the trend of societal inequality has been significantly helped by government intervention, as evidenced by trust-busting legislation in the Progressive Era and the emergence of a social safety net with the New Deal

Combating this pervasive problem will take time, resolve and resources. It won’t be easy, but with collective interest and subsequent action, it is absolutely possible.

The pandemic has necessitated our adaptation to the way we live our daily lives, and for good reason. However, corporate consolidation and societal inequality is absolutely not a problem we should be merely adapting to but continually fighting.

Corinne Neustadter can be reached at letters@collegian.com or on Twitter @cneustad.