Rowing Upstream

On March 17, 2020 our world was rocked when Governee Jay Inslee issued a proclamation to mandate the closure of all hair salons, nail salons, spas and other non-essential businesses that could not maintain 6ft social distance from customers during their operations. The original order was intended to conclude on April 1, 2020. We are now halfway through April. Our industry has been weathering the storm that is COVID-19 with little to no acknowledgement of our suffering.

The Unemployment Line

With salons being ordered to close, many salon owners could not support keeping their team fully employed. Originally some employee based salons were able to aid their workers by paying out accrued time off. At that time we were all hopeful that within a few weeks we would be back at our craft. Unfortunately that was not to be. Now, most salon owners have laid off workers, so they could apply for unemployment insurance. Unfortunately unemployment is only a fraction of what stylists normally make, and not all stylists who work as employees have obtained enough hours to qualify.

Sadly many of these currently unemployed stylists were already living paycheck to paycheck. With high costs of living and/or families where obligations on a normal basis are hard to meet those who are currently receiving unemployment are not able to make ends meet.

NOT ELIGIBLE

Self Employed stylists took the mandatory closure very hard, as they do not pay into and thus do not have access to unemployment insurance in individual states. Most self employed individuals will save for periods of uncertainty in income; surgery, vacation, maternity leave, etc. Unfortunately times of low/no income are typically preplanned, and no one was planning on a pandemic.

Many booth renters are now realizing just how important it is to always be saving an emergency fund. Even for those that did contribute to a rainy day fund, it is difficult to stretch savings when it is impossible to know when we will be allowed to return to work. Paying business expenses AND personal expenses (when no income is forthcoming and with very little notice) is like trying to row upstream after you went over the waterfall.

Emotions are Running High

How most of us feel about the COVID-19 salon shutdown seems to come in waves of grief. Denial, acceptance, bargaining, anger, depression. We are all moving through these stages at different times. There is so much panic and anxiety occurring right now, that it is easy to slant towards being negative or destructive when trying to seek or receive help. Its only human nature.

We have found it important to step away from the news and social media for “breaks,” for mental health. Call or message a friend, pay attention to how much sleep and water we are getting, and make sure to be generous and patient with ourselves and others. We can only get through this if we help hold each other up when others are feeling weak or vulnerable. 

Help is Slow Coming

Once the president deemed COVID-19 to be national disaster The Small Business Administration (www.SBA.gov) started to offer SBA Disaster relief loans to businesses at a 3.75% interest rate. Stylists were dismayed because the Federal Reserve had dropped the interest rate on loans to less than 1%. This prompted business owners to wait for the federal government to weigh in and offer more support for the working class.

RESOURCES:

.https://disasterloan.sba.gov/ela/Account/Register1

https://www.sba.gov/funding-programs/disaster-assistance

Generating Income

Companies have shifted into high gear to offer the ability to create custom online stores and affiliate programs allowing hairstylists and barbers to earn income by recommending products to their clients for at home use, and earning a commission. In some instances, companies have raised the commission to support the crisis of so many losing their incomes overnight.

The initial offering from one local distributor, was to increase the stylist commissions from their online selling platform, Salon Interactive from 25% to 50%. This helps salons and independently run stylists make some income during the shutdown. Unfortunately, the commission increase was not sustainable costing the company up to $30k. The previous commission was reinstated which caused some stylists to become dissatisfied, while many others were grateful to have a way to make any income during these trying times.

Another income stream many cosmetologists have taken advantage of is the sale of gift cards. Many pros have created social and email marketing campaigns or are text messaging their clientele asking them to purchase gift cards for future services through Square or similar online POS/gift card platforms. Hoping to also protect their future income, many utilize a policy of smaller gift card amounts that allow for use of one gift card per service.

Time Marches On

Intimations from press conferences from the federal government & local officials were that we needed a longer period of time for social distancing and closed or limited business. Then came another Gov. Inslee proclamation extending the non-essential business closure through May 4th. Federal guidelines (at the time of this blogpost) for social distancing were announced to last until April 30.

Additionally, the CDC has recommended cloth masks when in public when conducting necessary tasks like grocery shopping or visiting the doctor.

You’re Not Covered

Upon hearing of the salon shut down, many small business owners thought,

”Hey, no problem! This is why I have business insurance with business interruption coverage.”

Prior to filing claims cosmetologists searched their polices and were relieved when their policies claimed to cover CIVIL AUTHORITY.

“Why yes, my salon was shut down due to civil authority aka the government.”

Salon owners and self employed made claims and eagerly waited to hear back from their insurance agent. The answer? On all of the claims (from many reports of COWU public fb group members and other industry forums) was NO, you are NOT covered by insurance. You could only be covered if you had to shut down because COVID19 was directly related to the location from trace work. Or if there was physical damage like tornado or flood and the government shut down and/or made people evacuate.

The CARES Act

On March 27, 2020 Congress and the President passed and signed the CARES Act (Coronavirus Aid, Relief, and Economic Security Act.) It is a historic government effort to shore up the economy amidst widespread business closure and layoffs. $2 trillion dollars was alotted to expand the eligibility for unemployment insurance inside the states to self employed, independent contractors and part time workers. It also created numerous programs for loans, loan forgiveness and long term payback loans with low interest rates.

Issues w/ expanded unemployment: The states do not immediately have the ability to administer funds to the newly eligible. WA state’s Employment Security Department Director announced it may take up to 3 weeks from April 1 to implement new administration for the self employed, etc. Unfortunately some people don’t even have enough money for food. What do they do in the meantime? Getting a larger chunk later is nice, but what about those who need to feed their family?

Issues w/ Understanding the Components of the CARES Act: There are numerous components to the CARES act and nuances and details of how they work are emerging day by day as CPAs and HR professionals help to decode some of the intricacies involved. New information about the CARES act is released almost daily.

Health Insurance Concerns

With no income for those shut down without the opportunity of receiving benefits or paid time off/sick leave— many are afraid they cannot afford expensive health insurance premiums.

Washington State has its own health care exchange called wahealthplanfinder.org

A new special enrollment period is now available through May 8, 2020  for qualified individuals who now with no income are unable to pay health insurance premiums. People who find themselves with zero income can now cancel their old insurance plans and apply for Apple Health.

Go to the link below  for Apple Health: https://www.hca.wa.gov/health-care-services-supports/apple-health-medicaid-coverage

Commissioner Kreidler has ordered all health plans his office regulates to waive copays and deductibles for people requiring testing (doh.wa.gov) for COVID-19. If you are concerned about whether or not you should be tested, read the guidance from the Department of Health and call your providers first. Copays and deductibles will still apply if you need treatment.

Burglary and Vandalism

As if having no income wasn’t bad enough, in the last few weeks we have seen a huge increase in salon burglary and vandalism. People are feeling desperate and acting out in ways they otherwise would not. Criminals and hoodlums are feeling emboldened by empty stores. After hearing of this new threat many stylists flocked to their salons to take home anything of value.

A Light in the Darkness

Hope is on the horizon! With due diligence Washington has overcome the peak of the curve. The current concern by public health officials is that releasing everyone back to work, would make the curve spike again. We are eagerly awaiting word from the governor of a plan of action for our state to slowly start to open back up. Life as we know it will get back to normal, and we will come out the other side wiser and more prepared.