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A passer-by walks past a store closing sign. Associated Press file photo.

Nearly 40% of American small businesses closed their doors during the coronavirus pandemic.

The data from Opportunity Insights shows that 38.9% of small businesses were closed as of June 2, the most recent metrics available.

COVID-19 lockdowns and business restrictions disproportionately affected businesses that the government designated “nonessential,” such as restaurants and leisure and hospitality outfits.

The leisure industry saw the most dramatic change in open businesses. The number of leisure and hospitality businesses open decreased by 52% compared with January 2020. The number of open small businesses in the education, health care, retail and transportation sectors fell by around one-third compared with pre-lockdown baseline data.

The data, compiled by small-business marketing service Womply, is based on credit and debit card transaction data. A business was marked as “closed” if there were no transactions for three consecutive days beginning March 1. Businesses that conducted all of their transactions through third-party apps, such as DoorDash and Grubhub, would also be marked as closed.

Not every business marked as closed is closed permanently, said Jeff Michael, executive director of the Center for Business and Policy Research at the University of the Pacific, adding “small businesses have been disproportionately hit” by instituted by state governments.

The economy is continuing to show positive economic signs as the number of COVID-19 cases and fatalities fall after the effort to develop a vaccine for the coronavirus. Consumer spending has risen by 14.8% compared with January 2020. However, small-business revenue decreased by 29.7% compared with revenue before the pandemic began.

As the economy begins to recover from the pandemic, economists and small-business owners fear a national labor shortage. Expanded unemployment benefits brought the average unemployment benefit to $687 per week. Compared with a 40-hour workweek, that equates to a wage of $17.17, more than double the federal minimum wage.

“The government is actually hurting more than it’s helping in this area of getting people back to work because they’ve had (this) extended unemployment insurance, a bonus $300 per week,” said Rachel Greszler, an economics research fellow with the Heritage Foundation.

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