The coronavirus is having a devastating impact on the nation's small business workforce as one-third of companies have laid off or furloughed workers, and two-thirds have cut hours, according to a new survey.

The Morning Consult/Bipartisan Policy Council survey of 502 small businesses across the U.S. took place April 8-12 and found that 28% of companies had laid off workers, 30% had furloughed them, and 65% reduced their hours.

Source: Morning Consult/Bipartisan Policy Council.

Among the things the survey examines are the challenges small businesses face from COVID-19, how it affects the workforce, the use of expanded unemployment benefits, and the impact of the Families First Coronavirus Response Act.

A drop in business revenue was a major factor in the decision to lay off (79%) or furlough (82%) employees, respondents said.

Businesses with two to 49 employees on average laid off 63% of their workforce while larger companies with 50 to 500 employees laid off 54% on average.

Other findings:

  • Furloughs were on average 50% of the workforce
  • 23% of the companies that laid workers off let 91%-100% of their workforce go
  • 61% of companies that furloughed workers maintained their healthcare benefits

Revenue Declines

Over half of small business executives (59%) say the decline in revenue is the biggest challenge their business has faced during the pandemic while 29% said it's the second-biggest challenge.

And three-quarters (74%) are concerned about employees who have children at home because of school or child care closures due to COVID-19.

Most businesses have some or all employees working remotely, with 45% having all work remotely, 36% with a combination, and 20% with all employees reporting to the workplace.

Small business owners are split on the most significant challenge to working remotely with 29% saying it's the lack of regular personal interaction among staff, 23% pointing to family needs like childcare and homeschooling, 22% citing technology barriers, and 22% reporting no issues.

Most businesses have some or all employees working remotely, with 45% having all work remotely.

Small business owners and executives say expanded unemployment benefits are impacting their workforce decisions.

Nearly one-third of small business executives (32%) say expanded unemployment benefits have made it more difficult for their workforce during COVID-19.

And over half who have laid off or furloughed employees say the expanded unemployment benefits played a role in their decision, with about 35% saying it played a major role and around 25% saying a minor role.

Only 16% of businesses had an employee resign because of COVID-19.

Families First Act

Survey respondents are divided on the impact of the Families First Coronavirus Response Act.

While 44% of small businesses say it helps, 37% say it hurt business operations, although responses depend on company size.

Companies with 20 or less employees are slightly more likely to say it hurts their business, while those with 21 to 500 employees are more likely to say it helps.

The survey also found that while many small businesses are not using federal programs, 29% are using the Paycheck Protection Program, 28% tax credits for required emergency paid leave, and 18% economic injury disaster loans.