Half of NYC’s Minority-Owned Businesses Were Forced to Lay Off, Furlough Workers During Pandemic, Survey Finds

There will be no pandemic recovery in the city without the inclusion of minority and women-owned businesses, New York City Comptroller Scott Stringer says.

"Make no mistake: there is no economic recovery for New York City without the minority and women-owned businesses that generate strong local community wealth and are at the core of our city's cultural identity."

This week, Stringer released the analysis of a 2020 survey into minority- and women-owned businesses (W/MBEs), and made recommendations to the City and State to ensure and equitable COVID-19 recovery.

The analysis showed W/MBEs faced severe barriers to financial relief and were excluded from many COVID-19 contracts during the pandemic. Only 53 of the 154 W/MBEs that competed for City contracts during the pandemic received one, the analysis states.

Of the 503 City-certified W/MBEs included in the survey, 50% were forced to lay off or furlough employees, and although 87% of M/WBEs that applied for relief received funding through the federal Paycheck Protection, it was not enough to support businesses in the long term.

In addition, more than 30% said in June they would not be to pay rent in the next three months, and 85% said they would not survive for six more months.

Stringer said thousands of businesses were still struggling to stay afloat amid the COVID-19 pandemic and economic crisis, especially those owned by women and people of color.

"We will redouble our commitment to holding City agencies accountable and continue our efforts to identify and dismantle systemic barriers to participation," he said. "If we're going to make an equitable comeback from this pandemic, we must ensure our economy is truly inclusive and reflects the diversity that is New York City."

In December, Stringer released the annual Making the Grade: New York City Agency Report Card on M/WBEs report, and gave the city a C grade for its diversity spending, after four consecutive years of D+.

The grade highlighted the frustrating and problematic pattern of underinvestment in the city's many diversely owned businesses. Out of the $22.5 billion worth of contracts the city awarded in 2020, only $1.1 billion (4.9%) went to minority or women-owned businesses, the report showed. Between March and April, only 11% of the $1.5 billion COVID-19 related goods and services contracts went to M/WBEs and three agencies — The Mayor's Office, Department of Parks and Recreation and Health + Hospitals — all spent nothing on M/WBE contracts in COVID-19 related procurement. Throughout the 2020 financial year, 82% of M/WBEs did not receive any spending from the city.

Stringer said City and State programs needed to by prioritize allocating federal resources to M/WBEs, heavily impacted industries and businesses that were located in low income and high poverty areas.

He also recommended the City and State create a University to M/WBE Pipeline Program, which would bolster heavily impacted businesses while also providing employment to recent college graduates. And the Mayor's Task Force on Racial Equity and City Hall should develop a targeted plan to address areas where there is low M/WBE utilization even with M/WBE availability: spending within the Department of Education, COVID-19-related procurements and the M/WBE Small Purchase Method, he said.

"It is clear that City's supply chain needs to be closely examined with an eye toward reforming key imbalances in M/WBE spending at every step in the process." 

Other recommendations included an initiative to pay M/WBEs and small businesses for their upfront overhead cost; establishing a transparent timelines for RFP awards; and immediately signing an executive order requiring unconscious bias training for all employees, or else the City Council should mandate it.