SAXONBURG, Pennsylvania — Small businesses have been the backbone of the United States since its founding. The Hotel Saxonburg, which has also been known as the Vogeley House, the Belvedere House, the Laube House, and the Central Hotel, opened in 1835 and has lasted most of our nation’s existence.
Yesterday, the new owners abruptly closed the hotel after purchasing it two years ago. This not only shuttered the historic restaurant and hotel that served as a cultural touchstone for nearly 200 years, but it also caused people to lose their jobs.
Because the business was small, those job losses, likely around 50 people total, were a statistic that didn’t gain attention from the national press. However, when you consider that more people in the U.S. work for small businesses than any other sector, those numbers start to add up.
According to the Small Business Administration, which draws its data from the U.S. Census Bureau, over 60% of U.S. businesses are small businesses. They range from employing a handful of people (think your favorite food truck) to 100 people (think a local machine shop).
Before 2020, most Americans worked for small businesses that employed under 500 people. The last four years have upended that number. Now, only 53% of Americans work for businesses with 500 or more workers.
In short, the U.S. is no longer a nation of small businesses. In February, the Business Dynamics Statistics from the Census Bureau showed that shift. It also showed that the biggest change of all has been the increase in the number of people working for companies with 10,000 or more workers and the decrease in the number of people working at firms with under 100 workers.
Case in point: Last year, there was a story about a local independent grocery, Ferri’s, that closed after 70 years in a snowball effect that began with the unexpected shuttering of the small independent pharmacy located inside the grocery.
The beloved family grocery posted a note on the building’s large glass front windows and on Facebook, saying they were closing “with a heavy heart” after serving as “a cornerstone of our community and … fostering connections that have spanned generations.”
Ferri’s general manager, Gary Silvestri, said the loss of rent and traffic from the pharmacy had a significant impact, as it was 20% of the grocer’s business.
Another factor was the economic pressure of Target being located a couple of miles to the east, Walmart a few miles to the west, and Giant Eagle, a massive local grocery store chain, within a half mile of Ferri’s. All three of those companies employ well over 10,000 people and have the buying power advantage to lower prices over a mom-and-pop grocery.
Jeff Hastings of Wholesale Central, the leading publisher of content for the wholesale merchandise industry, wrote that ever since the dawn of the big-box store in 1962, the year Walmart, Kmart, and Target all opened their doors, small local businesses, from hardware stores to clothing and shoe stores to pharmacies and groceries, have struggled to compete.
He cited the 2006 Walmart move into the west side of Chicago as an example. Eighty-two local stores went out of business and cost an estimated 300 retail jobs in neighboring zip codes.
It isn’t just groceries, restaurants, or hotels that are falling to larger entities with 10 to 100 employees. Small local gas stations, clothing stores, and even small insurance companies that either close or merge with larger companies are also losing ground as big companies expand.
Locals in Saxonburg were sad that the hotel closed and that people lost their jobs, but they also felt confident that someone would come along and revive the historic hotel and restaurant as a gathering place for the community and visitors.
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The good news for small businesses, and why many economic experts expect a turnaround, is the surge in construction, manufacturing, retail, and service industries in January of this year. Optimism levels exceed the 51-year average, according to the latest Small Business Economic Trends survey from the NFIB Research Center.
That quarterly report revealed that the overall small business population is signaling renewed confidence despite persistent economic challenges. That just might turn around this current trend.