[House Hearing, 116 Congress]
[From the U.S. Government Publishing Office]
THE IMPACT OF CORONAVIRUS ON AMERICA'S SMALL BUSINESSES
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HEARING
BEFORE THE
COMMITTEE ON SMALL BUSINESS
UNITED STATES
HOUSE OF REPRESENTATIVES
ONE HUNDRED SIXTEENTH CONGRESS
SECOND SESSION
__________
HEARING HELD
MARCH 10, 2020
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[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Small Business Committee Document Number 116-078
Available via the GPO Webster: www.govinfo.gov
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U.S. GOVERNMENT PUBLISHING OFFICE
39-966 WASHINGTON : 2020
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HOUSE COMMITTEE ON SMALL BUSINESS
NYDIA VELAZQUEZ, New York, Chairwoman
ABBY FINKENAUER, Iowa
JARED GOLDEN, Maine
ANDY KIM, New Jersey
JASON CROW, Colorado
SHARICE DAVIDS, Kansas
JUDY CHU, California
MARC VEASEY, Texas
DWIGHT EVANS, Pennsylvania
BRAD SCHNEIDER, Illinois
ADRIANO ESPAILLAT, New York
ANTONIO DELGADO, New York
CHRISSY HOULAHAN, Pennsylvania
ANGIE CRAIG, Minnesota
STEVE CHABOT, Ohio, Ranking Member
AUMUA AMATA COLEMAN RADEWAGEN, American Samoa, Vice Ranking Member
TROY BALDERSON, Ohio
KEVIN HERN, Oklahoma
JIM HAGEDORN, Minnesota
PETE STAUBER, Minnesota
TIM BURCHETT, Tennessee
ROSS SPANO, Florida
JOHN JOYCE, Pennsylvania
DAN BISHOP, North Carolina
Melissa Jung, Majority Staff Director
Justin Pelletier, Majority Deputy Staff Director and Chief Counsel
Kevin Fitzpatrick, Staff Director
C O N T E N T S
OPENING STATEMENTS
Page
Hon. Nydia Velazquez............................................. 1
Hon. Steve Chabot................................................ 2
WITNESSES
Dr. Jennifer Huang Bouey, Senior Policy Researcher, Tang Chair in
China Policy Studies, RAND Corporation, Arlington, VA.......... 4
Mr. Jay M. Ellenby, President, Safe Harbors Business Travel, Bel
Air, MD, testifying on behalf of the American Society of Travel
Advisors (ASTA)................................................ 6
Mr. Andrew Chau, Co-Founder & CEO, Boba Guys, Brisbane, CA....... 7
Dr. Yanzhong Huang, Senior Fellow for Global Health, Council on
Foreign Relations, Professor, Seton Hall University's School of
Diplomacy and International Relations, Washington, DC.......... 9
APPENDIX
Prepared Statements:
Dr. Jennifer Huang Bouey, Senior Policy Researcher, Tang
Chair in China Policy Studies, RAND Corporation, Arlington,
VA......................................................... 29
Mr. Jay M. Ellenby, President, Safe Harbors Business Travel,
Bel Air, MD, testifying on behalf of the American Society
of Travel Advisors (ASTA).................................. 44
Mr. Andrew Chau, Co-Founder & CEO, Boba Guys, Brisbane, CA... 62
Dr. Yanzhong Huang, Senior Fellow for Global Health, Council
on Foreign Relations, Professor, Seton Hall University's
School of Diplomacy and International Relations,
Washington, DC............................................. 64
Questions and Responses for the Record:
Questions from Hon. Troy Balderson to Mr. Jay M. Ellenby and
Responses from Mr. Jay M. Ellenby.......................... 70
Questions from Hon. Troy Balderson to Mr. Andrew Chau and
Responses from Mr. Andrew Chau............................. 75
Questions from Hon. Troy Balderson to Dr. Yanzhong Huang and
Responses from Dr. Yanzhong Huang.......................... 78
Additional Material for the Record:
American Bus Association (ABA)............................... 80
Chamber of Commerce of the United States of America.......... 84
Statement of J.D. O'Hara..................................... 86
China Stopped Its Econony to Tacklet Coronavirus, Now the
World Suffer.-The New York times........................... 91
THE IMPACT OF CORONAVIRUS ON AMERICA'S SMALL BUSINESSES
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TUESDAY, MARCH 10, 2020
House of Representatives,
Committee on Small Business,
Washington, DC.
The Committee met, pursuant to call, at 11:33 a.m., in Room
2360, Rayburn House Office Building. Hon. Nydia Velazquez
[chairwoman of the Committee] presiding.
Present: Representatives Velazquez, Finkenauer, Golden,
Kim, Crow, Davids, Chu, Evans, Schneider, Espaillat, Delgado,
Houlahan, Craig, Chabot, Balderson, Hern, Hagedorn, Burchett,
Spano, Joyce, and Bishop.
Chairwoman VELAZQUEZ. Good morning. The Committee will come
to order.
I want to thank everyone for joining us this morning,
especially our witnesses for taking time to travel here to
testify before the Committee. Not only has Coronavirus cost
thousands of tragic deaths around the globe, this public health
crisis also threatens the fabric of our economy, which is woven
together by small businesses. Already, economists have lowered
global forecasts with the dimmest outlooks predicting a fall
from nearly 3 percent to just 1 percent growth due to the
uncertainty and disruptions inflicted by the virus.
Here in the U.S., because small businesses make up over 99
percent of all employers, we can expect that many will face
hardship from this public health crisis. From the local barber
shop to the neighborhood cafe, to the innovative small tech
firm, a pandemic can mean fewer customers, supply chain
disruption, and workforce reductions.
For the travel and tourism industries, both of which are
significant small business job creators, the outbreak of
coronavirus has been estimated as the worst crisis since 9/11.
In addition to hurting big retailers, like airlines, small
retail shops, independently owned restaurants, and creational
services are also seeing severe drops in customers. For
companies that rely on imports from companies in China, the
epicenter of the outbreak, the virus has broken up supply
chains, forcing small businesses to reconsider their options
for filling orders and meeting sales.
Additionally, while businesses around the country take
stock of their operational plan during a public health
emergency, small businesses may be unable to absorb cuts in the
workforce, causing them to scale back operations, ultimately
reducing revenue.
As the coronavirus spreads, so, too, does misinformation
and alarm. For many businesses, particularly Asian-owned firms,
this can be equally damaging. Because of fear, misinformation,
and xenophobia, many Chinatown restaurants and stores in my
city of New York were already feeling economic pain before even
one person in New York tested positive for the virus.
Merchants in Chinatown have reported sales drops as high as
80 percent. Many restaurants and retailers in Manhattan's
Chinatown, Brooklyn's Sunset Park and Queens are already having
to furlough staff and may have to let employees go.
That is why I am proud that the Emergency Funding Bill,
which included money for vaccines and testing, will also help
small businesses access federal loans if they suffer losses
related to the outbreak. This means that firms harmed by the
virus could apply for emergency loans with extremely low
interest rates to help them meet financial obligations.
Just as the SBA helps local economies get back on their
feet after a hurricane, wildfire, or earthquake, the agency can
be critical to helping our small businesses recover from this
public health crisis.
In dealing with this public health issue, our number one
goal is to contain the spread and ensure that those infected
are treated and fully recover. One way to do that is to support
paid sick leave. Having people go to work sick only increases
the likelihood of transmission and further prolonging the
decrease in demand for goods and services that small businesses
provide.
I look forward to hearing from our public health experts on
the health challenges presented by the outbreak. However, we
also understand that there will be an economic impact and that
small firms will be among the hardest hit. I look forward to
hearing your experiences and concerns. In my view, we should
all be focused on preparedness, working together in a
coordinated way, and providing accurate, reliable information
to our small businesses and the American people. In the end,
the stakes are too high, and the federal government cannot
afford to get this wrong.
I would now like to yield to the Ranking Member, Mr.
Chabot, for his opening statement.
Mr. CHABOT. Thank you, Madam Chair. And I appreciate you
calling this hearing in for your early leadership on this
issue.
On January 30th, the World Health Organization declared
COVID-19 a public health emergency of international concern. On
January 31st, Health and Human Services Secretary Azar declared
a public health emergency.
Undoubtedly, this virus is having an immediate and tangible
impact on our Nation. In recent weeks, it has become obvious
that our economy is not immune to the effects of the virus. We
must summon every available resource of the U.S. Government to
overcome the impact of the coronavirus epidemic on the U.S.
economy.
Diseases do not know borders, and COVID-19 is no exception.
Over the past few months, global leaders have been ramping up
efforts to improve international information sharing and
cooperation.
Last week, the House Foreign Affairs Committee passed the
Global Health Security Act, a bipartisan bill that I introduced
along with Democratic congressman, Gerry Connolly of Virginia.
This bill strengthens our commitment to leadership on global
health security and puts in place necessary personnel and
systems to respond to pandemics like the coronavirus.
As the COVID-19 spreads in the United States, the entire
public health service must be operating at maximum capacity to
combat this threat.
Since 2015, Congress has made strategic investments in
public health resources. We increased the NIH, National
Institutes of Health funding by 39 percent, and the Centers for
Disease Control (CDC) funding by 24 percent.
To minimize the impact of COVID-19, it is important to
adhere to guidance provided by public health experts, whether
it is from the CDC or our neighborhood healthcare
professionals.
Five days ago, Congress passed an emergency funding bill to
support the administration's efforts in addressing COVID-19.
That legislation included $20 million for economic injury,
disaster loans (EIDLs) serviced by the SBA's Office of Disaster
Assistance, which leads the Federal government's long-term
economic recovery efforts.
The SBA's Disaster Loan Program provides numerous direct
loan options for disaster victims, including EIDLs, which
provide working capital to small businesses affected by
disasters to keep them afloat until they can resume normal
operations.
In this Committee, we will continue to consider any
proposed assistance strategies to counter the negative economic
impact of COVID-19 on America's small businesses.
I want to thank all the witnesses for being here this
morning. Thank you, Madam Chair, for holding this hearing.
And I yield back my time.
Chairwoman VELAZQUEZ. Thank you, Mr. Chabot. The gentleman
yields back.
If Committee members have an opening statement prepared, we
would ask that they be submitted for the record.
I would like to take a minute to explain the timing rules.
Each witness gets 5 minutes to testify and each member get 5
minutes for questioning. There is a lighting system to assist
you. The green light will be on when you begin, and the yellow
light will come on when you have 1 minute remaining. The red
light comes on when you are out of time, and we ask that you
stay within that timeframe to the best of your ability.
I would now like to introduce our witnesses who have taken
time away from their families and businesses to be here today
for this important hearing.
Our first witness is Dr. Jennifer Huang Bouey. Dr. Bouey is
a senior policy researcher and Tang Chair in China Policy
Studies at the RAND Corporation. As an epidemiologist with
training in clinical medicine and quantitative methods, Dr.
Bouey's research centers on Global Health Strategies and Social
Detriments of Health. She received her M.P.H. and Ph.D. in
Epidemiology from George Washington University and her MD from
Peking University School of Medicine.
Thank you for being here, Dr. Bouey.
Our second witness is Mr. Jay M. Ellenby, the president of
Safe Harbors Business Travel in Bel Air, Maryland. His passion
for travel began when he explored the U.S. of America as a
meteorologist. He has previously served as the Chairman of the
American Society of Travel Advisors, Chairman of the Hartford
County Chamber of Commerce, and Chairman of the Maryland
Chamber of Commerce.
Thank you for being here.
Our third witness is Mr. Andrew Chau, co-founder and CEO of
Boba Guys and Tea People USA. He has been featured as a top
emerging business leader on CNN, New York Times, Wall Street
Journal, Vogue, and NPR. Prior to a career in consumer products
goods and corporate marketing, Mr. Chau started his first
startup in 2011. He has undergraduate and graduate degrees from
UC Berkeley.
We appreciate you being here today.
I would now like to yield to our Ranking Member, Mr.
Chabot, to introduce our final witness.
Mr. CHABOT. Thank you very much, Madam Chair. And our final
witness here this morning will be Yanzhong Huang. Dr. Huang is
a senior fellow for Global Health at the Council on Foreign
Relations. He is also a professor and director of Global Health
Studies at the Seton Hall University's School of Diplomacy and
International Relations. He is the founding editor of Global
Health Governance, the scholarly journal for the New Health
Security Paradigm. He has published numerous reports, journal
articles, op eds, and book chapters on global health
governance, health diplomacy, and health security. He has also
authored the book, Governing Health in Contemporary China,
which was published back in 2014. Dr. Huang obtained his BA and
MA degrees from Fudan University and his PH degree from the
University of Chicago. He has been quite busy with speaking
requests lately, as you can imagine, so we are grateful that he
is able to be with us today.
And I yield back.
Chairwoman VELAZQUEZ. Thank you.
I will now recognize Dr. Bouey for your opening statement.
STATEMENTS OF JENNIFER HUANG BOUEY, SENIOR POLICY RESEARCHER,
TANG CHAIR IN CHINA POLICY STUDIES, RAND CORPORATION; JAY M.
ELLENBY, PRESIDENT, SAFE HARBORS BUSINESS TRAVEL; ANDREW CHAU,
CO-FOUNDER AND CEO, BOBA GUYS; YANZHONG HUANG, SENIOR FELLOW
FOR GLOBAL HEALTH, COUNCIL ON FOREIGN RELATIONS, PROFESSOR,
SETON HALL UNIVERSITY'S SCHOOL OF DIPLOMACY AND INTERNATIONAL
RELATIONS
STATEMENT OF JENNIFER HUANG BOUEY
Dr. BOUEY. Madam Chair Velazquez, Ranking Member Chabot,
and members of the Committee, thank you for inviting me to
testify today.
We all know now that COVID-19 is a highly contagious
disease that can cause 15 percent of the infected, severe
clinical diseases and 1 to 2 percent of fatality. The first
COVID-19 pneumonia cluster was reported from Wuhan, China in
December, but in less than 3 months of time, the outbreaks are
reported from over 100 countries on six continents. Without a
vaccine and a proven treatment, the only public health
interventions is social distancing. That is to keep the
infected and the healthy separated and provide supportive
medical care for the sick.
China used unprecedented quarantine policies. Locked down
cities, reduced the air, rail, and highway transportation. By
January 29th, all 31 provinces in China have declared public
health emergencies during the Chinese New Year.
To this day, mandator 14-day quarantines for travelers are
in effect in many cities in China. Outside China, more than 90
countries announced various types of travel bans.
How will this impact small and medium businesses? In China,
foodservice, tourism, hospitality, entertainment and retail
industries suffered most during the holiday season. Revenues
lost in service sectors during the Chinese New York week are
reported to be 142 billion USD, about 1 percent of the GDP. It
also caused immense shock that is still lingering till today.
The small and medium business in China accounts for 80
percent of the employment in the country. As in most countries
around the world, small and medium businesses are the engine of
the economy. According to several Chinese surveys in February,
about 2/3 of small businesses reported that they can only stay
open for 1 to 2 months with their current cash flow.
Most of the financial pressures are from paying the
employees, paying the rent, and the loan repayment.
The Central Government of China has launched several
policies to help. The Central Bank has released 174 billion USD
in February to ease the borrowing cost and the funds'
availability. The interest rate was cut by a quarter percentage
point to 2.5 percent. The State Council encouraged the private
commercial banks to postpone interest payment on loans until
the end of June and to defer the repayment of principal for the
time-being.
It also ordered the large state-owned banks to increase
lending to small businesses at preferential rates.
The local policy also helps. For example, Beijing
Government announced exemptions on some rent payment for up to
2 months, reducing tax and fees for small and medium
businesses.
However, until last week, only 30 percent of the small
businesses in China reported reopened. The difficulties they
face, including the public health requirement for requirement,
the 14-day self-quarantine requirement for travelers and
migrants, and a weak market demand fractured supply chain and
cash flow problems.
So what does it mean to U.S. business? The global supply
chain can suffer from COVID-19. China has the world's major
production of chemicals, metals, textiles, and electronics. And
seven of the top busiest ports in the world are in China. We
are expecting some degrees of supply chain, as well as the
logistic chain interruptions. The recovery time depends on how
fast China can reopen the factories and the COVID-19 pandemic
affects the world economy.
Although the U.S. economy is very different from that of
China, I still think there are some lessons the U.S. can learn.
I gave about a dozen recommendations in my written testimony on
epidemic controls and assistance to SMEs. Here, I will only
highlight three.
The first one, the SMEs are a critical part of the economy,
and financially, they are more fragile when the market demand
is down. Government should focus on helping SMEs during the
public health crisis by lowering interest rates, defer or waive
tax and fees, and easing the lending policies.
Second, the health equity issues should be factored into
the COVID-19 policies. Having support in childcare, paid sick
leave, and health insurance will help promote the safe
behaviors during the epidemic. That is someone who has the mild
symptoms or taking care of sick family members can stay at home
and obtain proper medical care. This will help separate the
infected from the healthy and reduce the disease transmission
opportunities. The lack of social support can prolong the
disease transmission, and in the long-term can harm the market
demands.
And finally, the U.S. government can consider setting aside
additional funding for unemployment insurance payments to help
SMEs avoid bankruptcy or help the creditors of the bankrupt
SMEs.
And with that, I will conclude my summary. Thank you for
your time.
Chairwoman VELAZQUEZ. Thank you.
Mr. Ellenby, now you are recognized.
STATEMENT OF JAY M. ELLENBY
Mr. ELLENBY. Good morning, Chairwoman Velazquez, Ranking
Member Chabot, and distinguished members of the Committee.
My name is Jay Ellenby, and I am president of Safe Harbors
Business Travel. I am also a veteran of the United States Navy.
Since 1985, Safe Harbors has served a diverse range of
client companies, organizations, and individuals throughout the
world. I am also here on behalf of the America Society of
Travel Advisors (ASTA), the national trade association for the
travel agency industry.
Travel agencies are responsible for the sale of the
majority of airline tickets in the United States and are the
primary distributor of cruises and tour packages. A full 98
percent of travel agencies in the U.S. meet the Small Business
Administration definition of a small business and are 2/3 owned
by women.
At Safe Harbors, the past few weeks have been among the
most difficult our agency has had since 9/11. Our clients'
response to the current crisis ranges from business as usual
(not many), to limiting travel to the United States, Canada, or
to stopping business travel completely.
Sales are down across the board. As of last week, our 2020
sales were down 20 percent year over year. We have seen a 37
percent decline in international travel and that is worsening
by the day. We expect March to be devastating and are preparing
for a 50 percent year over year decline. For April we can only
hope. Yesterday, we laid off a significant part of our
workforce, and still with tremendous uncertainties ahead.
In preparation for this hearing ASTA surveyed its members
about the impact the coronavirus is having with their business.
Ninety percent of clients are concerned about international
travel, while 72 percent are concerned about domestic travel.
Ninety-eight percent of respondents expect the crisis to have a
heavy, negative impact on the business this year. Ninety-eight
percent also expect a negative impact on business revenues,
with 27 percent expecting a reduction of 50 percent or more.
If I can leave anything with you today, this is the most
significant piece of this survey, 22 percent of respondents
report a risk of going out of business in 3 months and 25
percent within 6 months
Up until last week, layoffs were in the planning stages.
Layoffs are happening in large companies. We are large numbers
by my company and others similar to mine. I understand some
agencies have already shuttered their doors.
In closing, I want to take this opportunity to provide some
suggestions for what Congress and the Administration can do to
help our industry during this crisis.
Access to SBA loans. We were pleased to see that the recent
Supplemental Appropriations Bill included funding for the SBA
to provide about $7 billion in loans to businesses impacted by
the outbreak. We ask they consider additional funding if the
situation worsens and that you work with the SBA to relax some
of the collateral requirements for these loans.
Travel agencies are a service business and they do not have
as many physical assets as say manufacturers. In the past,
travel advisors were forced to put their homes up for
collateral in order to qualify for similar loans that were
given out after 9/11, so it is essential for these loans to be
accessible for small businesses that desperately need them.
Two, economic stimulus package. Please remember and include
small businesses in any proposal for an economic stimulus
package. Regardless of how long this crisis lasts, we feel
strongly that the Federal government should take quick action
on this front. Financial aid packages have been given to other
struggling industries, and the hysteria and misinformation from
many areas surrounded by COVID-19 that continues to plague our
businesses show no sign of stopping.
If the trend continues, as the members reporting continue,
we project a loss of revenue for our industry could exceed $7.7
billion this year alone.
On Friday, White House economic advisor Larry Kudlow
confirmed that the administration is considering timely and
targeted Federal interventions to help workers, businesses, and
industries most vulnerable economically to the outbreak. While
it is important to include relief for our airline and cruise
line partners in such a package, we respectfully ask that you
consult with, and receive, travel agencies' input on any such
package to ensure that it will help them weather the storm and
be in a position to serve their clients once the economy
rebounds.
Thank you again for the opportunity to testify today, and I
would be happy to answer any questions you may have.
Chairwoman VELAZQUEZ. Thank you, Mr. Ellenby.
Mr. Chau, now you are recognized.
STATEMENT OF ANDREW CHAU
Mr. CHAU. Good morning, Chairwoman Representative
Velazquez, Ranking Member Chabot, Congresswoman Chu, and
Congressman Kim, and distinguished members of the Committee on
Small Business. Thank you for the honor of providing testimony
before the House Committee on Small Business, although I wish
it were under different circumstances.
My name is Andrew Chau, and I am here on behalf of the
small business community, and over 20 million Asian American
Pacific Islanders (AAPI), who call this country home. And I am
the son of immigrants. My dad, a refugee from Guangdong, China,
and my mother, the daughter of a Taiwanese Air Force pilot.
I grew up 3 hours north of here in Woodbridge, New Jersey,
where we ran the only Chinese restaurant in town. My family
eventually moved to San Francisco, where we started another
restaurant in Fisherman's Wharf. I am what you call a
``restaurant brat,'' growing up around stoves, duck sauce, and
sesame oil.
After over a decade in Corporate America, I myself came
back into the food business opening a chain of cafes and
restaurants, specializing in boba milk tea and Asian-inspired
snacks.
My story as a small business owner is fairly common. Two
million of the 30 million small businesses are AAPI owned.
Small business is interwoven into our culture. Growing up as
perennial outsiders, we sought refuge and built businesses
across Chinatowns, Japantowns, and other ethnic enclaves
scattered throughout the country. And even if you did not grow
up in these enclaves, I am sure many people, including those in
this room, have stumbled into a Chinatown noodle shop or Korean
BBQ shop at 1 am. That was me last week.
You can count on these establishments to be open late and
bustling, often run by first and second-generation immigrants,
hustling to make ends meet, chasing what was once the goal of
every immigrant in this country, the American Dream. This dream
and the small business culture embedded into the fabric of
today's society is at risk today. Our community usually prides
itself on resourcefulness, self-reliance, and grit, so it is
telling that we are asking for assistance during this crisis.
I am sure you have all read the news. Chinatowns and other
AAPI enclaves across America are experiencing a drastic decline
in patronage. A recent New York Times article said that
business is down as much as 70 percent due to the coronavirus
COVID-19.
Sadly, most of this is due to misinformation and overblown
media coverage depicting the virus as an Asian disease. This
virus has no color. It has no ethnicity. It has no borders.
COVID-19 is a respiratory virus, but it is fast-mutating into a
social virus: xenophobia, Sinophobia, and marginalization of
American citizens.
I know this is the Committee on Small Business, but the
negative stigma of this virus will impact our community long
after COVID-19 is gone. We learn every day about attacks on
AAPIs simply because of our physical appearance. But that is a
topic for another day.
The mission of this Committee is to protect and serve the
interests of American small businesses. As a board member for
National ACE, a national non-profit serving AAPI-owned
businesses, we estimate that small businesses usually carry
about 2 to 3 months of working capital. So, as we enter the
third month since the news broke, many businesses, particularly
those in these enclaves, are holding on for dear life. They do
not have sufficient cash reserves to weather this storm. The
economic hardship on each business owner then trickles down to
the labor force as many are letting go of their employees to
cut costs. The destabilization of labor and discretionary
income will have ripple effects throughout our economy.
In addition to influencing consumer sentiment, COVID-19 has
also affected the global supply chain. My business uses
ingredients from all over the world, from Japan to Taiwan to
Thailand. Anything that is imported from overseas is delayed
over a month or indefinitely in cases where the factories have
shut down.
I have heard from many people throughout the country that
their businesses are facing similar issues. Banquets are
canceled. Ingredients are delayed. And sole proprietorships
like photographers, musicians, and anything tied to
hospitality, events and entertainment are affected, too.
We say small business is the backbone of the American
economy, but what happens when the backbone is fractured?
I say this on public record as a testimony not just for
COVID-19, but for all future communicable disease that stall
economic productivity.
Today, the small business community, and AAPIs, we need
help. And one day, it will be another community.
What makes our country so unique is that we got this far
despite our differences, and we learned how to bridge our
various cultures and take care of each other.
As a millennial, I hear we do not really talk about The
American Dream anymore. As I understand it (and I had to Google
this), the American Dream is to live a ``richer and fuller
life, enabling opportunity according to ability and
achievement.''
I believe your recent disaster loan relief bill breathes
new life to that dream. The American Dream is alive and well. I
believe that. But we just have to remember that enabling
opportunity is not always about opening doors; it is also
removing barriers.
We need more help like the loan assistance program so that
our small businesses in our communities can thrive again. The
loans give us enough runway to adjust to the changes in the
marketplace, even if it is caused initially by misinformation
and unwarranted stigma.
We as a community are confident that your committee will
pass other pieces of legislation to show the world that
American small businesses embody the values that built this
country: grit, resilience, and helping our neighbors.
Thank you for your time.
Chairwoman VELAZQUEZ. Thank you, Mr. Chau.
Dr. Huang, now you are recognized for 5 minutes.
STATEMENT OF YANZHONG HUANG
Mr. HUANG. Thank you, Madam Chair, and thank you our
Ranking Member, Mr. Chabot.
Well, we know that the COVID-19 that originated in China,
is continuing to spread rapidly worldwide. And if we adopted a
WHO definition on the pandemic, it is very clear that all the
conditions have been met to declare the outbreak a global
pandemic. But that does not necessarily mean the virus is
becoming more dangerous. In fact, according to the WHO, the
case fatality rate is 3.4 percent. That very likely has been
heavily influenced by developments in China that has more than
83 percent of the COVID-19 deaths. If we adopted the South
Korean data which allows us to give a more accurate and
optimistic picture of how they saw the virus actually is, the
mortality rate is actually just over 0.6 percent. That is close
to the mortality rate in other parts of China. That is the
parts of China excluding Hubei province.
So the virus is not as lethal, virulent, as we thought. And
with more cases being found, we expect the case fatality rate
is going to be lower. And also, keep in mind that only 81
percent of the cases are actually mild, and COVID-19 deaths
also increase with age. With virus most serious affecting older
people with preexisting health problems.
So in that sense, this virus falls in the category of what
we call the dread risk. That is they are high profile but post
a lower aggregate risk to human death.
So what is the impact of this dread risk? Well, the dread
risks could encourage an alarmist approach that can elicit a
disproportionate level of fear among the population that may
distort government and public response. It can lead to cause
for governments to undertake more aggressive actions in
confirming cases, isolating patients and closing down close
contacts, even though the effectiveness of these measures is
still subject to debate and the cost of implementing these
measures can be immensely high. That we have seen in China
wherein they declare those implementing those measures in Wuhan
and Hubei providence and beyond.
Driven by panic and fear, our country is pursuing
aggressive, domestic containment measures may also prompt other
countries to impose stringent restrictions on travel and trade.
That we have seen in Italy. Unjustified documentation had been
requested from importers of Asian cheese in Greece; lettuce
exported to Poland; fruit to Croatia, while Italian-grown
apples refused by Ukraine.
Many of those measures actually instituted in the outbreak
can also be sticky. That means they are not so easy to rescind
once they are instituted. China, for example, did not lift its
ban on pork products from Canada until November 2009, 4 months
after the H1N1 swine flu activity declined in most countries.
And also, government and public responses informed by fear
can cause huge damage toward the economy. If the COVID-19
pandemic lasts more than a year, the CCC, Coronavirus, crude
oil, credit shock, leads to widespread business failures, mass
unemployment, and may lead the entire world into a global
recession.
So what should we do? I think it is very important that we
adopt measures to be proportionate to the actual risk posed to
our society. Rather than focus solely on emergency
mobilization, it is equally important to emphasize prevention,
precaution, and risk management by politically neutral
professionals. In that sense, washing hands is actually more
effective than wearing masks. Because masks, while an
instrument of protection itself also is a symbol of panic and
fear.
It is also important that the U.S. consider rolling out a
strategy that ends to slow down this rate of the virus in the
community and minimize the economic impact of the outbreak. So
a mitigation-based approach wherein the virus, specially become
uncontainable, would be a preferred approach. Thank you.
Chairwoman VELAZQUEZ. Thank you, Dr. Huang. I'd like to
thank all of the witnesses for their incredible and important
information that they have shared with us.
Mr. Chau, I would like to address my first question to you.
I represent Chinatown, both in Brooklyn and Sunset Park. I
have heard that discriminatory rhetoric and outright racist
anti-Asian sentiment are a couple of the reasons business is
down around Chinatown in my district.
Is this something that has negatively affected your
business in New York, and San Francisco, Los Angeles?
Mr. CHAU. Thank you for the question, Representative
Velazquez.
I believe our business, for the record, has fluctuated, has
been down in some stores, especially those located around these
ethnic enclaves. So we have a store, I think, in your district,
around the Lower East Side. I think that one is flat at this
point. I think the community around us, including a lot of my
friends, I am sure you have seen some of the New York Times
articles, including I think my friend Wilson Tang. He runs Nom
Wah Tea Parlor. I think there is a lot of misinformation where
they put the face of coronavirus as Chinese restaurants or
Chinese patrons, and that is leading to this larger scare in
your districts as you said.
I have seen that personally also to a lot of our places in
L.A., in Chinatown as well. Not that we have a space, but we
were just in Koreatown as I said earlier, and I have never seen
Koreatown so empty. And I hear a lot from our friends who own
these establishments, that they have also faced, I would say,
some form of discrimination and stigma.
Chairwoman VELAZQUEZ. Thank you.
Dr. Bouey, you are quoted saying that we often see
epidemics of rumors, conspiracies, and discrimination coming
from outbreaks like this. How can we ensure that facts and
science prevail in global health crises?
Dr. BOUEY. Thank you.
So I always say that where is the epidemic of disease, that
there is always another two epidemics. That is disinformation
and discrimination.
So in order for us to fight all three epidemics, I think
the facts that in the social media, in the public is very
important. If we have the facts in the public area, you have an
efficient risk communication plan, then we can fight the
disinformation.
Chairwoman VELAZQUEZ. Thank you.
Mr. Ellenby, consumer spending is at the heart of the U.S.
economy. How long can those small businesses in the travel and
leisure sector survive with business conferences being canceled
and more people staying at home?
Mr. ELLENBY. My sector of the business is corporate travel.
So we service corporations that travel to such events,
conferences, and they have literally shut down everything
certainly for March, certainly for April, and we do not see any
kind of life at the end of the tunnel when it comes to the
corporate side.
When it comes to the leisure side, vacation-type travel,
when messaging goes out about the cruises, taking cruises, not
to take a cruise, maybe you should take a cruise, if you are
older, younger, it is very, very difficult for any agency to
remain in business when such messaging goes out.
So to answer your question specifically, there are many
agencies right now that are shutting their doors as we speak,
and some of them will be closed within 3 to 6 months.
Chairwoman VELAZQUEZ. Thank you.
Dr. Huang, what is the potential impact on low-income
households if they are forced to take long periods off work to
contain the spread of the virus, and how can we protect their
financial stability if they get infected?
Mr. HUANG. Thank you.
I think if they take sick leave for too long, then many of
this is going to affect certainly the small businesses because
they cannot afford doing that. Unlike the big business, they do
not have this room to maneuver and the resources to mobilize.
And if the large, this absenteeism continues, we expect also
the countries, the food and fuel supply also will be affected.
That is going to deal another blow to the economy.
So I think it is very important that the U.S. consider a
nationwide approach to the issue of sick leave. Maybe after
when it is used up their sick leave, it is time for the Federal
government to foot the bill. But in doing so, we should find an
approach to protect both the workers and the business owners.
Chairwoman VELAZQUEZ. Thank you. My time has expired.
Now, we recognize the Ranking Member, Mr. Chabot.
Mr. CHABOT. Thank you, Madam Chair.
Dr. Huang, let me go with you first if I can.
We know that the official Chinese data can be unreliable.
Should this impact the global response to the virus? Do you
take that into consideration as you are studying this? Could
you comment on that?
Mr. HUANG. Absolutely. I think when we are making public
policy, it is very important that we do evidenced-based
decision-making based on reliable, trustworthy data. So if the
data actually shows, for example, a high mortality rate, that
is what we found, for example, in Wuhan, that may have
something to do with the issue of the quality of the data, but
it also has something to do with the draconian measures that
have been undertaken without advanced planning. So there was a
huge probable number of deaths was caused by those draconian
measures and the health system being overwhelmed by the huge
demand for testing and hospitalization.
So the WHO mortality data has been actually heavily
influenced by the data in China because the mortality, China
contributed to almost 3/4ths, more than 3/4s of the mortality
worldwide. So that probably gave us this false sense, this is a
very, very dangerous type of virus. In fact, if we top even the
WHO mortality rate of 3.4 percent based on the current
population, and if we adopt this prediction that 20 percent of
the population will be infected, we are going to expect 100
million deaths worldwide.
Mr. CHABOT. Thank you very much.
Dr. Bouey, I am going to go to you next, if I can.
You had mentioned social distancing as one of the main ways
to perhaps deal with this. Would you kind of describe in detail
what you mean by that for anybody that may want to follow up
with you?
Dr. BOUEY. Sure. Social distancing in principle is
basically separating those who are infected with those who are
not infected. So we could see patient isolation as one of the
typical of such policies. So as soon as someone is suspected or
a confirmed patient, one thing they should do is be put at a
distance with people who are healthy. So this relates to the
hospital, how we define hospital triage, so that we know that
the cases, infected people can be separated from those other
people who are healthy.
Quarantine would be an extreme measure policy on that
because quarantine basically asks everyone, including those who
are healthy, to stay put, not move. So between these two there
are many variations of using protections and different type of
policies in this line. But this is the only one, only thing we
have now.
Mr. CHABOT. Thank you very much.
Mr. Ellenby, you have been in the travel agency business a
while now. What advice would you give to those, it is pretty
stunning what you said about 22 percent of them could literally
be out of business within 3 months. It is very disconcerting,
shocking. Is there any advice that you would give folk to avoid
that?
Mr. ELLENBY. Thank you for the question.
Yes, I have been in the business for quite a while and have
seen it all, I suppose. Everything from 9/11 to downturns to
other diseases. An ASTA, the American Society or Travel
Advisors, does a really good job in getting the word out, the
information out, and how to address such situations. And
unfortunately, there are very, very painful decisions you have
to make, such as I mentioned yesterday, that we had to perform
layoffs. And depending on the size of the company, if they have
the ability to do that. Many of the members within ASTA do not
have that type of workforce. And in some cases there are under
five, maybe there are maybe one, or two, maybe three. And so it
is very difficult for them to address those immediate expenses.
So, labor is the critical piece.
Mr. CHABOT. Thank you. I am almost out of time, so I want
to get one last.
Mr. Chau, how are you communicating with your staff, with
your employees about what you are facing and how you are trying
to deal with it, and I assume avoid, you know, people losing
their jobs as much as possible? What are you telling them? What
are you doing?
Mr. CHAU. Thank you for your question.
We just had a team meeting before I flew out to address
this. I think the one thing that would help mitigate some of
the scare is to give more information, as much as you have. So
I recommend that for any business owner.
So we actually had a team meeting where we said, well, here
are the options. If the city where we are from, San Francisco,
does go into a full quarantine, here is what would happen. And
if not, here is what would happen if it was a partial kind of
shutdown. And so we walked that through our managers, and we
kind of gave them kind of a realistic idea of what could
possibly happen. And I think they took it really well. And I
think that is where I think a lot of small businesses across
America should start doing that because washing hands and all
the other preventative measures are already out there. Now we
are just getting into scenario planning.
Mr. CHABOT. Thank you very much. My time has expired.
Chairwoman VELAZQUEZ. Time has expired.
We recognize Ms. Finkenauer, Chairwoman of the Subcommittee
on Rural Development, Agriculture, Trade, and Entrepreneurship
from Iowa.
Ms. FINKENAUER. Thank you, Madam Chair. I appreciate being
here today. And thank you all for coming all this way as well.
I know you guys have a lot of demands on your time right now.
So it means a lot that you took this to be here.
I am from Iowa. We actually today, we now have eight Iowans
that have tested positive. And it is something, you know, my
biggest concern is, obviously, the health and safety of my
constituents and Iowans and folks across the country. I know
our office, we have been in touch with all the hospitals in the
district personally as well, making sure that we are keeping
that line of communication open, hearing what people need,
making sure that we are providing that. And I think that is one
of the things that is going to be most important across the
country, making sure that those lines of communication are open
and that they are getting to the right resources.
One of the other things that is then next on my list after
health and safety is our economy in Iowa and across the country
as well, and how our employers are doing as well as our
employees who devote so much of their lives to making the world
go around in Iowa and across the country.
And so I was happy last week. We were able to pass the
emergency loans, $7 billion in emergency loans that the Small
Business Administration would be able to provide with
businesses being affected.
But I do have more questions for the Small Business
Administration. I know you guys are not able to answer those,
but I figured maybe the best way to do this would be kind of
tell you what I want to know from them and then also how it
would be affecting you.
So one of the things that I want to know is making sure
that we are getting this information out to people across the
country and to our small businesses. And how are we ensuring
that that is happening?
And so, I know Mr. Chau and Mr. Ellenby, you guys are on
the frontlines of this working with small business owners
across the country. And what have you seen so far as the
outreach and what could we be doing better?
Mr. CHAU. I will make mine pretty short.
So right now, I guess in the age of the Internet. A lot of
the small business groups and network is online. So, I can name
a couple that we are a part of. Prior to this hearing, I
solicited some of the network from Asian Hustle Network. It is
called AHN. There is another set of LinkedIn networks that we
have. And so there are a lot of these Facebook groups that we
have been talking about, what are you doing? So in each of
these big metropolitan areas there are also localized versions.
There are chamber of commerces. There are other versions of
chamber of commerces online. So I would recommend the
government generally tap into some of these key stakeholders, a
part of each of these big networks, and disseminate
information.
Being at this hearing today I think is a major step toward
that.
Ms. FINKENAUER. Yeah.
What about you, Mr. Ellenby?
Mr. ELLENBY. Yes, thank you.
Absolutely. The trade associations are a perfect way to get
the information out and also solicit feedback. Certainly,
chambers of commerce as well. So I agree with both areas.
Ms. FINKENAUER. Great.
And then the other thing I know, again, we passed the $7
billion, but this is the question for the Small Business
Administration, is how quickly can we get that out to the folks
who need it?
But my question for you then is how quickly do you need it?
Yesterday, I know, but----
Mr. ELLENBY. I would love to answer yesterday.
Ms. FINKENAUER. Yes.
Mr. ELLENBY. And also, I want to preface what I mentioned
in my testimony was that easing the regulations for collateral.
Ms. FINKENAUER. Yeah.
Mr. ELLENBY. So I think that is a very, very careful area.
Ms. FINKENAUER. Okay. That is helpful.
Mr. Chau?
Mr. CHAU. I just second that. I think we were talking
before this that many of these small businesses are already on
kind of their last leg on their working capital, so it has been
months, 2 months at least for some of these businesses, so the
sooner the better.
Ms. FINKENAUER. Yeah. And with that I know the big thing
for me, too, is making sure this is getting out to folks so
that when we have employees that need to have time off, they
are able to do it and they are able to get their paychecks. And
it is just incredibly important, and these are the types of
things that need to be thought about, again, all across the
country. So I am grateful that you guys are here having those
discussions. And I hope the Small Business Administration, I
will be also reaching out to them with more of these questions,
but I want to know, are they reallocating employees, making
sure that there is more bandwidth to be able to handle these
loans and get them out in a timely manner. And what are the
contingency plans for all of that? So I think there is a lot we
need to be doing, following up, making sure these are getting
out the way that they are because I know just hearing your
testimony today how important this is.
So thank you for being here, and I know we all still have a
lot more work to do. So thank you.
Chairwoman VELAZQUEZ. The gentlelady yields back.
I would like to share with you that yesterday, we reached
out to the Small Business Administration. We requested for them
to put on their website all of this information, but also,
every state has to work with the SBA to declare that they have
an emergency in their state, and that will open up the process.
Now we recognize the gentleman from Oklahoma, Mr. Hern,
Ranking Member of the Subcommittee on Economic Growth, Tax, and
Capital Access.
Mr. HERN. Thank you, Madam Chairwoman, Ranking Member
Chabot, and the witnesses for being here today to talk about
this very important issue.
While we have had just a minimal impact in Oklahoma, I
believe two confirmed cases now, this is still significant what
is going on in the industry. Being in the restaurant industry
my entire life, I have had a lot of friends who have called and
are very concerned. And according to the American Hotel Lodging
Association, they are estimating right now average or annual
revenue loss within the range of $32 to $76 billion, including
up to about $100 million per day. Occupancy rates declining to
20 percent in major markets. At best, daily room sales decline
around 15 percent, which result in about 15,600 fewer shifts
available per day for room attendants. So obviously,
significant job impacts there.
Mr. Ellenby, given your expertise in this travel industry,
can you talk about what you think about these effects now? And
if you could compare the previous global--you mentioned you
have seen it all. When you have been around the industry you
get impacted first because people usually shut down touching,
being around other people. Could you compare what is happening
right now so early in this process and this coronavirus issue,
compare it to H1N1, SARS, and all the other things that have
gone on?
Mr. ELLENBY. Yes. Thank you for the question.
The comparison, it does not compare to H1N1. The only thing
I can think it compares to is really 9/11 of all the previous
incidents. And that was one where we literally had 3 months of
shutdown and we started to see business pick up again in
January. At a minimal rate. But it does not compare. This is a
significant, significant impact. And yes, travel is often the
leading edge. On corporate travel, certainly. We know
oftentimes way out ahead, maybe 3 months, where the economy is
going. And we are in the deep of it right now.
Mr. HERN. So obviously, you have an opinion because, you
know, when you look at deaths around the world, a single death
is tragic, but when you compare it to what we know in Oklahoma,
and our governor just spoke to this on Friday, that we, so far
in this season, we have had 54 deaths from flu and thousands,
and we have heard from CDC where we have had tens of thousands
of people that have been infected, hundreds of thousands,
actually. I think 350,000 hospitalized since October 1. We have
had tens of thousands of deaths. And in the United States, we
have had 26. What do you attribute that to? Because we are
talking about average people and companies that are canceling
conventions. McDonald's Corporation just canceled their largest
convention they have every 2 years. The first time in the
history of the company, in Orlando, where it has impacted at
least 50,000 people traveling in for that. Why is that
happening?
Mr. ELLENBY. Yeah. The cancelations are through the roof.
In fact, more of our business right now involves cancelations
than it does actual revenue.
The cancelations, I believe, is through information that is
coming out from multiple sources. The media gets a hold of
that. They put their information on that as well. And I think
the feedback that we are getting with respect to travelers are
if they should go someplace, they want to get back. They want
to get back home. And they do not want to be quarantined. So
they want to make sure that if they go someplace, they can make
it back, and they do not know what is taking place in that
particular destination. So I think it is the fear of the
unknown, and so therefore, that is why they are making the
decision to not go, and that is why companies are afraid to
have those type of events outside the area.
Mr. HERN. So again, I do not want to put words in your
mouth, but having talked to many people in the industry, maybe
it is just because of my background, that a lot of folks feel
like there is a lot of information that is flowing around that
while other epidemics, pandemics have been more deadly, much
more deadly than this, there is a lot more fear being put into
the communities that have maybe made people err on the side of
caution much more so than in previous history.
Mr. ELLENBY. Yes, you are putting words in mouth. That is
exactly it. That is exactly it. It is just, there is
inconsistent messaging. And if there was consistent messaging
coming out of multiple departments, if there was consistent
messaging that was approrpite, that would translate into those
really making decisions on travel at a much more reasonable
effort.
Mr. HERN. Madam Chair, I will yield back the rest of my
time. Thank you so much.
Chairwoman VELAZQUEZ. The gentleman yields back.
The gentlelady from California, Ms. Chu, Chairwoman of the
Subcommittee on Investigations, Oversight, and Regulations is
now recognized.
Ms. CHU. Mr. Chau, as you have seen first-hand, Asian
American communities across the country have been severely
impacted by the coronavirus outbreak. In fact, I was shocked to
find out 2 nights ago that in Los Angeles, Chinatown, one of
the two remaining major Chinese restaurants that is capable of
having a sit-down banquet, Ocean Seafood, is shutting down as a
result of the sharp decline in business as a result of COVID-
19. And in my district of the San Gabriel Valley in Southern
California, I attended a press conference in February to
highlight the impacts of this outbreak on our local restaurants
and businesses. That was nearly a month ago but even then,
restaurants were reporting a decline of about 50 percent. Those
impacts have only worsened now, and that is why it is so
important that Congress and this Committee help those small
businesses get the assistance that they need, and that is why I
joined Congressmember and Chairwoman Velazquez in co-sponsoring
the H.R. 6040, the Small Business Relief from Communicable
Disease Act. And fortunately, key provisions of this bill were
included in the emergency supplemental appropriations package
that passed Congress and was signed into law last week. Now,
small businesses impacted by COVID-19 will be eligible for SBA
disaster loans.
But the outbreak has resulted in more than just economic
harm. We have also witnessed horrific instances of xenophobia
and abuse directed towards Asian-Americans for no reason other
than their appearance. These incidents rely on harmful stigmas
and stereotypes that threaten to far outlive COVID-19 and have
even been repeated by members of Congress. And in the last
Small Business hearing, I held up a fake flyer that had the
actual logos of the WHO and the County of Los Angeles actually
naming five Asian businesses that people should avoid because
of a man that they alleged had coronavirus went there.
So as a business leader in the Asian-American community,
could you elaborate on the types of xenophobia you have
witnessed and discuss what we need to do about it?
Mr. CHAU. Thank you for those comments. It is a lot to
unpack because I think a lot of it is personal. And in the
community, we have been talking about this a lot.
Unfortunately, both in your district and so many of the
districts we have our stores in, we have seen psychological
impact. People are afraid to go out. Sometimes you cannot even
know what is going on.
There was a recent assault or stabbing in Brooklyn the
other day where an Asian male was stabbed but they cannot tell
if it was xenophobia or not because it was implied maybe but
there are all these uncertainties. And then it is creating
communities that are essentially playing their past issues
against each other. And I think what we need to do first of all
is to have better dialogue among anybody who has been
marginalized, too. I think, number one, we need more allies.
I think secondly, for those who are going through it, there
already are groups that take care of each other. There is a
group that I am on. I think it is called Crimes against Asians
on Facebook where we actually see, and every time it is
reported it gets amplified. And then it goes to larger media
outlets like nextshark.com or NBC News. And that is actually
how we funnel through the pipeline. So there is actually a lot
of grassroots efforts. We continually need to do that, and I
think that, as long as the messaging keeps getting out and goes
through I would say the media outlets, we do a better job of
storytelling and we have a better narrative.
So unfortunately, the psychological damage is almost
irreparable because at the same time you have a 14-year-old, I
think, girl in L.A. recently that was also made fun of and
assaulted. It is on the Internet and people recorded this. And
imagine, she is 15 now. In 10 years, she is going to be 25. She
is going to carry that with her. And then that might have her
treat certain communities that targeted her in a different way.
And it is just a vicious cycle. So I think we need to control
all of that.
Ms. CHU. And could you say how we can address the anxieties
within the Asian-American community without compromising public
health in the business arena, like, for instance, if your
business had to have a worker that quarantined itself?
Mr. ELLENBY. Yeah, I think people, we have to separate the
data. We have to be much more data, and do the math on this, is
that the quarantine very likely, as Dr. Huang said, that
somebody may get it in any of our communities. And so at that
point, we have to separate that from whoever is getting it and
not overgeneralize a certain population. So if that does
happen, I am sure people will take that as a precaution, but I
just think people need to rely more on the data and use that
versus some sensationalist media message.
Ms. CHU. Thank you. I yield back.
Chairwoman VELAZQUEZ. The gentleman from North Carolina,
Mr. Bishop, is recognized for 5 minutes.
Mr. BISHOP. Thank you, Madam Chairman.
As I listen to the testimony and the questions, I am struck
that we are sort of saying it can be harmful if we underreact.
It can be harmful if we overreact. It can be harmful if we
react with measures that have unanticipated adverse
consequences. So it is a tricky situation that we are in.
Mr. Chau, I am interested, did I understand that you have
retail outlets? That is what your business is?
Mr. CHAU. Yes, that is correct, sir.
Mr. BISHOP. And I know that there is a great deal of
discussion in media and among government these days of having
workers telework.
I assume that for a business like yours that would not be a
viable solution; correct?
Mr. CHAU. That is correct.
Mr. BISHOP. Because you have got to be open. You have got
to have retail employees who are there prepared to serve the
public in those facilities.
Mr. CHAU. That is correct. A lot of people, especially in
big cities, big companies are having them working from home but
that is very hard to do when you are retail-based.
Mr. BISHOP. And I would imagine there are a lot of small
businesses to whom that situation would apply then. They need
their workers at their locations; right?
Mr. CHAU. Yes, that is true.
Mr. BISHOP. There was a good bit of discussion about
allowing paid leave or maybe the government funding paid leave.
If that were done on an indefinite basis, for example, that
also might undermine a small business like yours, would it not?
Mr. CHAU. That I am not really sure what the ramifications
are. I have heard of different pros and cons of having paid
leave. I, generally, I think, have been on the side of having--
FMLA, for example, does not cover a lot of these instances, so
like extending that may help. In my mind, my job is to make
sure that our workers are safe and that they are the most
productive. And so if they are constantly worrying and not
being their best self because they are worried about a
paycheck, I think it actually in the long run hurts them. So I
think having some type of security would help alleviate that.
Mr. BISHOP. If it were available, essentially, without
condition so that it just deterred your employees from coming
to work, under those circumstances if you are a small business
there might be some adverse consequence. Would you agree with
that?
Mr. CHAU. Yeah, I would agree that there would be some
qualifications that would qualify for that. I think maybe----
Mr. BISHOP. They need to be designed appropriately?
Mr. CHAU. It has to be designed. It has to have the right
rules. Otherwise, if you are inferring that it might get
abused, I think that is definitely possible. I think we need to
have the right checks and balances for a larger solution like
that.
Mr. BISHOP. I wonder if it is obvious to everybody the
panel that it would be wrong and counterproductive for anybody
to exploit the situation for political advantage by either
provoking panic or unreasonably undermining confidence in
public authorities' responses, or even attributing false
motivations to public or private responses.
What about you, Mr. Chau, would you agree with that?
Mr. CHAU. That I do not have an opinion on. I think that
might be a little too complicated. I am just a businessman. But
I would like to think that people are not politically motivated
on something that is like a public health issue.
Mr. BISHOP. I would hope so, too. I think that is good
enough for me.
Thank you, Madam Chairman. I yield back.
Chairwoman VELAZQUEZ. The gentleman yields back.
Now we recognize the gentlelady from Kansas, Ms. Davids,
for 5 minutes.
Ms. DAVIDS. Thank you, Chairwoman Velazquez, and Ranking
Member Chabot for calling this hearing today.
The first confirmed case of COVID-19 was found in the
Kansas 3rd Congressional District which I represent, this past
weekend. And thankfully, the person who got sick did everything
right to help contain the spread of the disease. But even
still, there are preventative measures that are being
implemented in Kansas and all over the country as we have
heard, to help mitigate and contain this novel coronavirus.
These precautions are incredibly important for public health
and safety and have to remain our priority.
But we cannot overlook the impact of this epidemic on our
economy, and especially the small businesses such as those who
are here today and those in the district that I represent,
which are the backbone of our communities really.
I have already heard from small business owners in my
district who are worried. One shared a fear that this would not
only jeopardize her business's future but would jeopardize her
ability to pay her bills, cover her rent, get her groceries.
And crises like these can be especially tough on small
businesses. Small retailers in restaurants do not have the
teleworking options for their employees and disproportionately
suffer when sales slow down as folks start to stay home.
So my first question is, because this coronavirus has just
reached Kansas's 3rd District this weekend and we expect that
there will be more cases, no one can be sure what the full
impact is going to look like, I want to know what you think I
should be doing to help the small businesses prepare for the
effects of lower sales of sick employees?
Mr. Chau, I would like to start with you.
Mr. CHAU. Thank you for your question.
I think it goes back to what we have been saying. A lot of
it has to do with communication. The bill that has passed, that
loan assistance would definitely help in getting the right
information to them and getting them involved if that applies
to their business is number one.
Number two, I think there is a lot of, I would say,
community support. I think you are seeing right now a lot of
communities banning together and saying I think there is a
hashtag called Support Chinatown. So I think if that could
happen in your district, people I think realize that,
especially if there is not as many cases in your specific area
and it is a little bit more of an over stigmatization and
generalization, supporting local businesses has really been
helping certain areas. So I think probably a campaign related
to that helps.
And I think third is just anything that helps, whether it
is certain other programs that helps with financing or capital
or just other things having rent or expenses be deferred, I
think that is a big one. I think I have been reading some of
the certain businesses, I think a bunch of us wanted to band
together where we make a statement where we say to the
landlords, please provide some relief. And just going to
landlords directly. And I think having that come form
legislators or parts of the government might also help because
it still shows solidarity.
Ms. DAVIDS. And then I would love to hear from other folks
on the panel, when you talk about the information that I can be
putting out, we definitely have on our website information from
the CDC. We also have information from our local county
governments and the state government.
Is there any particular way that you think that our office
should be either doing outreach or taking in information just
from the people who are on the ground who are dealing with this
day to day?
Dr. BOUEY. My recommendation is that we need to understand
when people are in doubt or having fear, the first thing that
will harm their information is that if they have suspicious of
the government or they do not trust the government can handle
it. So I think the transparency is very important that whenever
there is a case that there should be reported in time. So
transparency is important. And the other thing is the
competency. Right?
So if we know that there are testing sites, there are
treatments ready, that information needs to be ready for the
public.
Ms. DAVIDS. Thank you. And it sounds to me from those of
you who have been studying this and directly feeling the
impacts of this is that we need to make sure in our
congressional offices that we are sharing information with
folks, being as transparent as possible, and then those of us
on the Committee need to makes sure that we are helping to
support our small businesses, whether it is through programs
and adjusting some of our loan programs and the collateral
requirements.
I thank you for your testimony today, and I yield back.
Chairwoman VELAZQUEZ. The gentlelady yields back.
Now we recognize the gentleman from Florida, Mr. Spano.
Mr. SPANO. Thank you, Madam Chair. And thank you to each of
you for being here today. We appreciate you taking the time to
come up and speak with us. I am sure we probably all have our
individual examples.
I was just at an event on Saturday, Friday maybe it was,
where a good friend of mine I have known for a very long time,
they own a travel business, and she was just almost, you know,
crying about where they were at. They had a trip scheduled to
Italy that had been canceled the day before. A trip to D.C.
this week that thankfully had not been canceled, but the
implications for her and her family were pretty significant.
And this is a business where they, you know, the business is
them, her and her husband. Right? So it really has turned
people's lives upside down, which is incredibly unfortunate.
But one of the questions that she had for me was that she was
concerned about the folks who had booked trips through her
company. They had been canceled but there was no recourse for
them even potentially the insurance policies that they had
purchased were not paying out because I guess, the language in
the policy itself.
So I would like to ask Mr. Ellenby if he could speak to
that for just a moment. Are typical travel insurance policies
covering this scenario?
Mr. ELLENBY. Thank you for the question. And I am sorry to
hear about that particular situation.
Not all insurance policies are the same. Some do not cover
it; some do. I do not have specifics on those particular
programs. We can certainly provide that.
What I can tell you is there are many suppliers who have
become very liberal in their policies. And so working with the
suppliers they have done a very good job in responding to any
kind of cancelations, refunds, and working with a travel to
support the client.
Mr. SPANO. So what would you recommend someone do if they
are in that specific circumstance? How do they petition, I
guess the venue or whoever might be giving them a
reimbursement?
Mr. ELLENBY. In that particular case I would recommend that
the agent friend speak with their supplier and continue to
speak with that supplier if they do not get the correct answer.
And I am sure the American Society of Travel Advisors could
help out in that case as well.
Mr. SPANO. Great. Thank you.
And you had mentioned in response to a question a moment
ago that the only thing you could only liken this scenario to
is the 9/11 tragedy, and it took 3 or 4 months before things
even began to move again. So I know it is hard to say because
we really do not ultimately know how significant this is all
going to play out, but what is your best guestimate? You know,
typically, in this type of scenario, let us just say for
example, I will give you this, let us say things begin to
improve beginning in May or June, people begin to feel
comfortable booking trips again. Will the travel agencies make
up for what they have lost in part? Will people travel more
over the summer because they have not traveled in March and
April? Or is it just lost opportunity?
Mr. ELLENBY. That is a great question. Thank you for asking
that.
You would like to think there is pent up demand. You can
only hope there is pent up demand. But I think, I would say for
the most part there is probably lost opportunity. There is lost
opportunity. I doubt it is going to be made up through the rest
of the year. Very doubtful.
Mr. SPANO. Yeah, thank you.
Madam Chair, I yield back the remainder of my time.
Chairwoman VELAZQUEZ. The gentleman yields back.
Now we recognize the gentleman from New York, Mr. Delgado.
Mr. DELGADO. Thank you, Chairwoman.
I appreciate all of you being here, providing all of your
insights.
I wanted to sort of piggyback a little bit, Dr. Bouey, on
some of your considerations for policymakers when it comes to
supporting SMEs. I thought one of your takes was pretty
interesting here. You say that SMEs could benefit from
diversifying business platforms, online base platforms and
virtual service provisions can help SMEs sustain business
during quarantines or travel bans. It would be helpful if
policymakers could bring tax breaks and technical guidance to
help SMEs restructure their business operations.
Can you speak a little bit more about that?
Dr. BOUEY. Sure. So the data we got from China, some of
these are surveys given to SMEs. Some of those are ecommerce
data that it collected. And it shows that definitely overall
retail are hurt but it is not all even. So the business that
has a virtual store, during the quarantine and travel ban,
those are hurt most. But at the same time, people are buying
groceries or even meals and certainly other supplies through
online vendors.
And then in China, we also see that the shops that have no
servers shop or even a vending machine which has been here for
a long time but in China it is actually a new phenomenon. But
we see that all of these machines and human-free shops are
getting more traffic, becoming more popular.
So online education, online entertainment, and online gyms,
those are also seeing an increase in traffic.
So one idea is that would it be helpful for a business to
have both a physical shop as well as an online shop, a virtual
center that at least can help the business to keep contact with
their potential customers or maintain some loyalty of the
customers.
I know some businessmen in China, during the downtime, they
even send free videos to their customers and help entertain
their kids because the kids are home and have nowhere to go.
But these are the very innovative ways to help the business.
Mr. DELGADO. And I am assuming, and please correct me if I
am wrong, that you have not encountered any examples of those
types of approaches being incentivized within the SBA; right?
There is nothing you have come across that would speak to this
specific issue?
Dr. BOUEY. No.
Mr. DELGADO. Right. Okay. So that is definitely something I
think we might want to look into. I would imagine that some of
the low interest loans, too, if they were tied to sort of
incentivizing----
Dr. BOUEY. Innovation.
Mr. DELGADO.--to diversity in this way could be quite
helpful.
Dr. Huang, I just want to also bring you into this
conversation because I think a the end of the tail end of your
testimony you said that, you noted that the targets alone are
helpful but you also said the U.S. government may consider
following the example of Italy to provide tax cuts and credits
for small businesses.
Could you speak specifically to what you might have in mind
when it comes to credits?
Mr. HUANG. Thank you. That is a very specific question.
I think in terms of the credits, I think they could be
taking just different forms. It could be a tax credit to those
who have been suffering during the outbreak. It could also be
like the forms like difference of the payment that we have seen
also in the case of China. But----
Mr. DELGADO. Let me help you out. I think I have an idea. I
think maybe we can do a tax credit for those companies that
look into diversifying their platforms. I think that could be
one way in which we are able to help facilitate this. I think
that obviously trying to go about this with a clear eye and a
deep politicized fashion is going to be of utmost importance.
I just want to again thank each and every one of you for
your insights. It is very much appreciated.
And with that I yield back. Thank you.
Chairwoman VELAZQUEZ. The gentleman yields back.
Now we recognize Mr. Schneider, from Illinois.
Mr. SCHNEIDER. Thank you, Madam Chair. I want to thank you
and the Ranking Member for having this meeting. I want to thank
the witnesses for joining us today and sharing your
perspectives, your experiences.
We are dealing with a crisis. There is no question about
that. It is being dealt with at all levels--in our local
communities, at the state level, here in the Federal
government.
Mr. Chau and Mr. Ellenby, you were literally at the
frontlines dealing with this in your businesses. And I think
one of the greatest challenges we face, especially as
policymakers here in Congress, is trying to find the path to
help you short term how to deal with the immediate impacts it
is having on your business.
Mr. Ellenby, you said you laid off a third of your
workforce?
Mr. ELLENBY. Not a third but we laid off a significant
amount.
Mr. SCHNEIDER. But there are going to intermediate and
long-term impacts on this, and I think, Dr. Bouey, others have
talked about this, the transition from trying to contain to now
mitigating the consequences of this. And that is why I am
pleased that in the House last week we initiated, and we passed
$8.3 billion. It passed the Senate. It was signed by the
President. That was a big step to move forward to help the
people at the frontlines. We need to continue with that.
In my state, in Illinois, our Governor Pritzker issued a
disaster declaration yesterday for the state. This allows the
state to access those emergency funds, and I suspect we will
see more of that.
I also think in speaking to my colleagues, it is important
for us to be the public face, to make sure that we are
communicating with our constituents, keeping them informed at
all levels.
Someone else mentioned the challenge we face because every
action we take will have counteractions. And so we want to make
sure what we do is in the right direction and that we are
flexible to respond and make decisions today that will have
consequences to underly and support our decisions tomorrow.
But there are also things I think we can do that model
behavior. The no-touch screening, whether it is the Mr. Spock,
may we all live long and prosper, or it is elbow bumps, there
are things we can do. Washing our hands, singing Happy Birthday
twice as we wash our hands. Changing just general hygiene. It
sounds simple but that is a big step to try to mitigate the
impact of all of this, including disinfecting services,
desktops, phones, et cetera.
And let me just advise everyone. If you do not feel well,
please stay home for all of us. It is critical.
But as people stay home, it is hard, and I think this is
one of the things that we talked about. Whether it is
unfortunate layoffs or just go home for a couple of weeks, we
need to make sure that we are providing two levels I think of
support.
One is the level of income continuity, whether that is paid
leave, making sure that those who, whether they are working in
a restaurant, a retail store, travel industry, manufacturing,
that if they are not able to go to work, if they are not able
to get their paycheck, we are ensuring that they have the
resources to feed their families, to pay their bills, to not
lose their housing. That is crucial.
The second piece that I think we need to be thinking about,
and we have talked some about this with the small business
loans, is make sure businesses like yours have the capital to
ensure continuity.
Mr. Ellenby, I do not know if this is going to be a few
weeks, a few months, or take us, someone said this may extend
into 2021. That is going to be real challenges. And for you it
is not just managing your business but managing what hopefully
as you said, the pent up demand, as customers come back, we
want to make sure that our businesses are there for those
customers and that they are healthy and that employees can come
here.
We passed the bill last week. Legislation designated the
coronavirus as a disaster which opened up the Small Business
Administration's Disaster Loan Program. This is critical. But
we need to continue to stay focused and be thinking about what
is our next step? This is a long-term play. We need to be
thinking not just next week but next month and the month after
and policy. So I thank you.
I have now left only a minute for questions. But I will
open the question. Mr. Chau and Mr. Ellenby, what other ideas
as you have sat here, as you have thought about it, are there
other things we can be doing to help small businesses like
yours?
Mr. ELLENBY. I will be very quick.
One of the things, our membership of ASTA, my company
itself, we do provide paid sick time and we do provide health
insurance. But there are many smaller companies who do not.
They do not have paid sick time. And that is going to be a very
big issue so that really needs to be considered in any kind of
loans and stimulus.
Mr. SCHNEIDER. Mr. Chau, 14 seconds.
Mr. CHAU. I am going to echo that. Actually, I will just
echo that. I think that has been a big topic. Just, especially
with a lot of part-time workforce, the income continuity is
going to be the big thing. And as an augmented workforce
becomes normal, we have to figure that out just as a society.
Mr. SCHNEIDER. Great. Thank you.
And with the 2 seconds I will steal over my time. The idea
of how do we move forward in this crisis is critical but
learning the lessons so we are better prepared for the next
crisis is just as critical. I commend you for offering that
paid time off and sick time and health insurance. Everyone in
this country should have that.
And with that I yield back.
Chairwoman VELAZQUEZ. The gentleman yields back.
Now we recognize the gentleman from New York, Mr.
Espaillat.
Mr. ESPAILLAT. Thank you, Madam Chair. Mr. Ranker.
I am really concerned about the way small businesses are
being treated in this crisis, because testing as of yet has
been very limited. So as we increase significantly testing
across the country, maybe to a degree that you can even go to a
local pharmacy and get a test kit, the numbers are just going
to go right through the roof. And this will create a long-term
crisis for small businesses.
We saved the banks. We saved Detroit. Now the White House
is proposing to save the cruise industry and the travel
industry. And yet we want to saddle small businesses with
loans. And I support that with zero percent loans, but
nevertheless, we want to saddle them with debt. And they will
be shaken up by this crisis and then they will have a looming
debt at the end of this process, Madam Chairwoman.
New York City is offering not only loans but grants up to
$6,000 to those businesses that witness a 25 percent drop in
business.
The empowerment zones offered a tax credit to businesses of
$3,000 per employer that hire local. I am proposing that we
offer a tax credit for businesses that have witnessed a 25
percent drop in business and that retain those workers.
In addition to that, I think that we could give grants for,
for example, the installation of smart energy equipment in
small businesses that will result in a dramatic drop of 30 to
50 percent of energy costs. That is money in your pocket. That
is help.
The rest is saddling you up with debt. I do not see how
that is helpful. It may be helpful now, but it will cripple you
tomorrow. So I think that we have not helped small businesses
the way we should, the way we have helped other parts of the
economy while small businesses are the biggest employers in the
country. So we worry more about the banks when we had the
meltdown on Wall Street. We worry more about Detroit when we
had the near destruction of the auto industry. And now we are
worrying about cruisers and the travel industry, and we are
leaving you guys behind because all we have given you is debt.
And debt may be zero percent, but debt is debt and debt is bad,
especially if you are weak economically and you cannot make
ends meet.
So my proposal, I want to hear from all of you as to what I
am proposing. There is a model out there already. Do you
support a tax credit for those businesses that have witnessed a
drop of 25 percent in business and have retained their local
workers? Because this is also about communities. And do you
support grants to do the renovation of smart energy equipment
that will not only lead to a better environment than cleaner
energy but also to a 30 to 50 percent drop in your energy
bills? Anybody?
Mr. ELLENBY. Yes, yes, and yes.
So yes, we could agree to every one of those items. And I
would like to offer, I will be very quick so everyone else can
speak, we may have some additional ideas from our trade
association that could help you as well.
Mr. ESPAILLAT. We would love to hear from you those ideas.
You are on the ground. You can tell us what can make it work
for you. But at the end of the day it has to be in your pocket.
Mr. ELLENBY. Yes.
Mr. ESPAILLAT. Do not bring me to another breakfast for a
loan that I am not going to qualify for, because if you need a
loan, you probably have shabby credit. You know, you are not
able to meet payroll, or you do not have capital to expand. If
you have good credit and you meet payroll and you have money on
the side, the bank comes to you. You do not need to go to the
bank. So if you have additional ideas, I would love to hear
them.
Mr. ELLENBY. Thank you.
Mr. ESPAILLAT. Anybody else? Doctor?
Mr. HUANG. Yeah, certainly, I would support that idea. I
think policymakers will not make a choice between maximum
protection and minimum disruption. Actually, it is always about
balancing the draconian containment measures including
aggressive testing against the impacts on the economy and
society. We have seen the countries like South Korea, Italy
also, why are they taking aggressive testing measures of seeing
the actual number, significant increase of the number of the
confirmed cases, but in time they are also very keenly aware of
how they should minimize the damage this could cause to the
economy.
Mr. ESPAILLAT. Thank you.
Mr. HUANG. Thank you.
Mr. ESPAILLAT. Thank you, Madam Chair.
Chairwoman VELAZQUEZ. The gentleman yields back.
Mr. Ellenby, you mentioned that you were working in the
travel industry back during 9/11; right? I would like for you
to go back and check, besides the Disaster Loan Program that we
had in place back then and that we included in this bill, and
see if there were any other provisions that were part of that
9/11 package that you believe were effective in helping the
businesses that you represent, and get back to us.
Mr. ELLENBY. I would be happy to do so. Thank you.
Chairwoman VELAZQUEZ. Thank you.
We want to thank all of the witnesses for taking time out
of their schedules to be with us today. I would like to thank
all of the witnesses for educating us on the potential economic
and public health impacts of the coronavirus. Moving forward,
it is our priority to do whatever we can to help those small
businesses that will disproportionately suffer economic harm.
We must also realize this is a public issue as well, and I
encourage everyone to plan, prepare, and to not panic. Common
sense measures, like washing your hands and seeking medical
care if you are experiencing flu-like symptoms will go a long
way, and our federal government will play an important role as
well.
Dr. Bouey, I heard you when you said it is important that
people have faith in the information that they get from our
government; otherwise, we are going to defeat any purpose.
I urge colleagues on both sides of the aisle and the
administration to work together on a coordinated government-
wide plan to respond to the coronavirus.
With that, I will ask unanimous consent that members have 5
legislative days to submit statements and supporting materials
for the record.
Without objection, so ordered.
If there is no further business to come before the
Committee, we are adjourned. Thank you.
[Whereupon, at 1:03 p.m., the Committee was adjourned.]
[Dr. Jennifer Huang Bouey wished not to respond to
questions from Hon. Troy Balderson]
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