New Jersey Economic Development Authority CEO Tim Sullivan joined Yahoo Finance Live to discuss President Biden's stimulus plan and what it means for small businesses.
ZACK GUZMAN: Welcome back to Yahoo Finance Live. As we've been discussing, we've been seeing this recovery play out, but hitting a bit of an air pocket here across the country, as Team Biden looks to pass that $1.9 trillion stimulus proposal, bringing some much needed help here for small businesses across the country that have been struggling through all of this.
So for more of a focus on that, I want to bring on our next guest. Tim Sullivan is with the New Jersey Economic Development Authority, and he joins us now. And Tim, I mean, when we think about this on a state by state level, one of those key aspects of this package is aid to states and local, you know, authorities here. So talk to me about what's needed when you're seeing this play out in New Jersey, where we're at in this recovery, and why it's such an important push here for Democrats as they step into office.
TIM SULLIVAN: Yeah, I think what President Biden has proposed is really important. As we think about this, Governor Phil Murphy here in New Jersey has talked about, obviously, first and foremost, this is a public health crisis. But right behind it, it's an economic crisis. And it's one that's being felt, like the public health crisis, disproportionately by small businesses and by businesses owned by people of color.
The PPP program is great, and we've seen it, strong demand in New Jersey in the early days. But we need revenue replacement for small business grants and forgivable loans that we can make available. And so, that's got to be an important part of any recovery package. And so, we're so glad to see that as part of President Biden's proposal.
SEANA SMITH: Tim, what's the situation look like right now in a couple of months? How many more businesses are at risk of closing for good?
TIM SULLIVAN: Yeah, it's-- 2020 was probably the hardest year on record for small businesses in New Jersey and around the country. And 2021's got at least a couple of months more of very significant challenges. It varies by sector. So, anyone who's got sort of customer centric operations, which is everyone, but really, density centric operations, restaurants-- you know, New Jersey is the home of the diner. It's a tough time for diners.
And so, we've certainly got a fair share of tough times ahead of us, but hopefully, there's light at the end of the tunnel with vaccines and some of the relief measures that are being proposed out of Washington finally.
ZACK GUZMAN: And when we think about kind of the longer run implications here, obviously, it's tough for any business to kind of operate if you're relying on, you know, waiting for a next round of stimulus. At some point, it just becomes pretty hard to operate that way. So what are some of those longer run implications when you think about particularly some of these harder hit small businesses when you think about minority and women-owned businesses grappling with all this as well that might not have as easy of a road to tap into some of the capital structures out there.
TIM SULLIVAN: Yeah, this is a good example of a situation where COVID has exacerbated and laid bare long standing challenges. It was a tough go. And it was a harder-- it was a big challenge to be a minority women on business when the economy was good. Access to capital historically very challenging.
That's why Governor Murphy here in New Jersey has proposed to just sign a bill that incorporated Main Street revitalization in into the center of our economic development strategy with a significant state appropriation to not just do COVID relief, which is important, but as you said, get businesses back on their front foot so that they're growing and expanding. It can modernize and adapt to technology changes.
A lot of small businesses, when COVID hit, didn't have the right web presence, didn't have the right e-commerce presence. We've been helping businesses try and do that on the fly. But that's a good long-term investment that's good for creating jobs. It's good for sustaining these really important part of our small business economy. But it takes time. It's really-- it's about long-term investment and having a long-term committed focus to that. And that's what Governor Murphy is trying to advance here in New Jersey.
SEANA SMITH: Yeah, I've seen so many of these small businesses, of course, increasing their use of technology over the last several months. What are some of the other ways that businesses have pivoted and that tried to survive this very stressful time? Because one of the hardest parts I think about the virus that we're currently in right now is we don't know how much longer it's going to be. We don't know how long it will be until these businesses are able to operate at 100% capacity.
TIM SULLIVAN: Yeah, I think one of the sort of silver linings or one of the great things to have sort of learned and seen in the last 10 or 11 months, particularly here in New Jersey, our small businesses and our small business owners are resilient as hell. And they figured out creative nimble ways to stay in business to keep their people employed, but also keep their customers and their employees safe during this pandemic.
And so, whether that's through using curbside delivery, leveraging technology has been a huge part of the equation, whether that's online sales, whether that's adopting reservation systems for places like personal care and hair care type places that never had to do that before. And they've adopted and shifted on the fly and figured it out.
And I think you've got to give all the credit in the world to the entrepreneurs and business owners who have managed to figure this out and are staying and hanging tough through what's been a tough winter. And we've got a couple of months more to go here until the clouds finally part, I think.
ZACK GUZMAN: And Tim, I opened with calling out that a lot of people are paying attention to New Jersey. One of the reasons why is because the state has upped its minimum wage here in 2021 by $1, up to $12 an hour, on road to seeing that $15 minimum wage by 2024. Some critics have pointed out that puts added stress on some of these smaller businesses working to hit that new minimum wage. What are you seeing play out there in New Jersey as businesses adjust to that?
TIM SULLIVAN: Yeah, I think raising the minimum wage has been the smart thing to do, not just for people who receive the direct benefit of a better wage. And a family sustaining wage is something that I think everyone who works is entitled to and deserves. But it's also good for the economy. It puts more money into the economy. The people who get a raise, they spend it. And they spend it in small businesses. They spend it at the very businesses that we're trying to help through COVID relief programs and through our regular programs.
And so, I think having more family sustaining jobs is good for the economy in the long run. And I think that's why Governor Murphy was so committed and the legislature here in New Jersey worked with him to adopt what is a model minimum wage increase law that hopefully we'll see replicated at the federal level. And that's part of the incoming president's agenda as well. And so, hopefully that'll be part of raising wages for-- higher wages is good for the economy. It means there's more spending to be done.
SEANA SMITH: Tim, going off of Zack's question there, kind of doubling down on it, have you gotten any pushback, just in terms of business owners saying that they are going to have to layoff a certain number of workers because of the higher minimum wage?
TIM SULLIVAN: Yeah, I mean, you certainly hear that rhetoric during the discussion about whether to raise minimum wage or not. That certainly was something we heard reasonably frequently. I think the data bears out that generally speaking, minimum wage increases and job losses or job creation are particularly strongly correlated. Again, there's a lot of evidence to suggest that having more money in people's pockets leads to more spending in small businesses.
And so, there's offsetting. You know, it sort of gives and gets in any kind of move like that. And that's why I think the right long-term thing to do is to have a strong federal minimum wage. But in the meantime, I think a lot of the states like New Jersey are acting in the interest of not just the folks who, again, get the raises, but the long-term stability and fairness of that economy. And so, I think that the proof is in the pudding there.
ZACK GUZMAN: Yeah, very interesting recovery there in Jersey. In a year, that is set to see legal cannabis sales begin at some point this year as well. But Tim Sullivan, New Jersey Economic Development Authority, appreciate you coming on here to chat today. Be well.