Lexington’s Varnish Nail Shoppe was born out of an old house, crafted with local wood and natural light to emphasize the organic, non-toxic vision for manicures and pedicures that business owner Carla Larkin shared with builder and landlord Chad Needham.
Larkin had hired five full-time nail techs and a receptionist, and business was going strong. Then on Tuesday, Gov. Andy Beshear issued an executive order to shut them down to combat the spread of COVID-19.
“I think hopefully we can hold on for two weeks, but I don’t know how long we’d be able to go outside of two weeks,” Larkin said. “We work really hard for the money we make, and I hope that everyone has saved as much as they can, but with taxes, because we’re independent contractors so we save up all year to pay taxes and it’s kind of the worst time for this to hit.”
On April 1, rent is due, and then Larkin’s problems become Needham’s problems, too. He’s estimated that he rents 60% of his buildings to businesses that have either been shut down, like Varnish, or at half production, like restaurants. And he has mortgages to pay.
“We don’t know what’s going to happen, but the last thing I want to do is put pressure on these businesses, mostly young entrepreneurs,” Needham said. “I’m very concerned about the future of my business, trying to fix up old buildings and get young entrepreneurs in them.”
The consequences of COVID-19 are rippling through the economy with striking force, from nail techs and waiters to landlords and banks. A recent poll found that 18% of Americans reported they’d lost their jobs or had hours cut since the outbreak began. In Kentucky, where two-thirds of the state’s GDP is attributed to service industries, thousands of Kentuckians have already been fired, and their businesses shuttered, while many more just wait and hope for the best.
At the top of the chain, Kentucky banks are strong and flexible, said Traditional Bank CEO Andy Baker. He met with his lending team this week to authorize them to work with clients, offering anything from interest only payments to complete deferrals.
“Obviously, we’re concerned about a lot of small business and being able to sustain and grow,” he said. “We need to do whatever we can to support those folks because they employ most of the people in the community.”
Nonetheless, this pandemic has exposed a lot of cracks in our society (maybe we should have funded health departments better instead of more tax breaks for rich people?) but none more so than the lack of a social safety net for a huge percentage of our population who work in service and minimum wage jobs. These jobs don’t offer health care or paid medical leave and they don’t pay enough for people to put a lot away for savings. The service economy, it turns out, doesn’t work so well when the world turns upside down.
“We feel like we were starting to make some headway,” said nail tech Kameron Conley, who commutes from Mount Sterling every day. “But we don’t have 401k’s or much savings or anything we can draw from and we don’t know how long we can hold out.”
A FRAGILE SYSTEM
Dan Wu also made those calculations when the order came down. But ultimately, the former TV “Masterchef” decided that his Atomic Ramen out at the Summit, would have to close, probably for good. Twelve employees lost their jobs. His business was too small to offer health care or paid time off.
“This has made me realize how fragile this whole system is, and how small business owners are right on the margin,” he said. “When they have a bad week because of weather or a terrorist attack, it’s one thing, but this thing is going to be like a big giant sustained hurt that lays bare how close all of us are to the edge.”
At the Wise Bird Cider Company in the Distillery District, owners Greta Pittard and Tim Wright are going to hang on as long as they can. They’ve kept two supervisory employees on salary, with health care, but had to let go of the bartenders.
“This has exposed to a larger group of people than normally think about this that there are huge gaps in United States economy,” Pittard said. “We’re not prepared for disasters because we don’t have a society with a social safety net and if we did, we could weather this storm without as much mayhem and chaos as we’re going through.”
They’re thrilled with the local community response of gift cards and take out, the stopgap measures that folks are embracing right now, but concerned that it’s come to this.
“I think at a macro level our society has become largely complacent with this,” Wright said. “The true driving force of the economy are businesses like ours, this year we have invested more than half a million dollars in the local economy( with payroll and other taxes). Our economic footprint is large for a business of this size.”
He’s right. It’s lovely all the ways that Lexington is supporting businesses like theirs, but like crowdfunding our health care, the small business community is too important to the overall economy to have charity as its only backup. No one knows what will happen next, but maybe this is cataclysmic enough to create the political will for improvement.
Meanwhile, Varnish employees have been putting together a plan to sell gift cards for future services or at-home manicure gift sets that can be delivered.
“We’re trying to be creative and positive,” Larkin said. “Also we’ve been overwhelmed by how supportive people are. Everyone has just loved on us ... from a safe distance, of course.”