Are small business owners angry enough at Gavin Newsom to throw him out of office?

By Sameea Kamal

Andrew McDowell, a small who owns With Love Market & Cafe in Los Angeles, poses for a portrait on August 4, 2021. Photo by Pablo Unzueta for CalMatters

Andrew McDowell, who owns a cafe in downtown Los Angeles, says the recall election of Gov. Gavin Newsom is a waste of time and money.

It’s not that he’s a big fan of Newsom. It’s that Newsom is up for reelection next year, so why spend the time and money now?

McDowell says the $276 million to hold the Sept. 14 election should be spent instead on grants for small businesses that are struggling. “If we were running California as a business, we would not be wasting these kinds of funds on these things that truly are not going to impact the bottom line long term.”

Even though his business suffered during the COVID-19 shutdowns, McDowell also cuts Newsom some slack on dealing with an unprecedented crisis. 

“We didn’t bring on a governor to bring us through a pandemic, but to run our normal day-to-day. Then they’re put into this furnace and we say, ‘Hey, you really didn’t do a good job,’” McDowell said. 

“I think really our view on our governor’s performance should be, what has he tried, what has he learned? Is he getting better? And not hold people 100% to mistakes — even stupid publicity mistakes.”

Recall proponents and the Republicans who want to become the next governor aren’t nearly as forgiving. 

Some criticize Newsom’s pandemic safety measures as overly restrictive and devastating to small businesses. Others call him a hypocrite by citing the infamous French Laundry dinner that he attended mask-less during a statewide indoor dining ban and by repeating false claims that the winery he founded stayed open.

For some business owners, the pain during the pandemic adds to longstanding frustrations over the cost of living in California, which could motivate them to vote to recall Newsom. The main advocacy group for small businesses, however, is not taking a position on the recall given its members differing views.

For his part, Newsom  who styles himself an entrepreneur — has taken some action to help small business owners, including tax breaks for business owners who received federal relief loans. Using a huge state budget surplus and a gusher of federal aid, the governor also pushed the largest economic stimulus ever, which included $2 billion in grants to 180,939 small businesses and nonprofits, according to California’s Office of the Small Business Advocate. An additional three rounds of funding were announced at the end of July, bringing the total to $4 billion. 

Joined by state Sen. Anna Caballero, Gov. Gavin Newsom signs bills at Solomon’s Delicatessen in downtown Sacramento on Wednesday, Sept. 9, 2020, to help small businesses across California recover from the economic impact from the COVID-19 pandemic. Photo by Daniel Kim, Sacramento Bee/Pool

The state also tried to help small businesses sell online, while providing free masks and hand sanitizer.

But not everyone received grants — or it wasn’t enough to keep them in business. In California, nearly 40,000 small businesses had closed by September 2020, according to Yelp data analyzed by the New York Times.

The businesses hit hardest by state and county stay-at-home orders lacked an online presence and had small cash reserves — typical of small businesses, according to the Los Angeles Economic Development Corp. The impact in Los Angeles County was particularly pronounced, where, according to 2019 Census data, 88% of businesses had fewer than 20 employees — places such as restaurants, bars and hair salons. 

Blaming Newsom, offering ideas 

For proponents of the recall election, the shutdowns and Newsom’s support of a law that forced employers to offer benefits to gig workers were among reasons to remove him from office. 

The Republican candidates are courting small business owners, primarily by bashing the governor’s approach to managing the coronavirus, but also by offering some proposals of their own. 

Kevin Faulconer, a former mayor of San Diego, says he would lift COVID-related business capacity limits and proposed a small restaurant relief fund.  

Larry Elder, a radio host and former small business owner, has emphasized the impact of crime on small businesses and has been outspoken about his opposition to a minimum wage.

John Cox, also a former small business owner, has pledged tax cuts to make California more business-friendly, while Kevin Kiley, an Assemblymember from Rocklin, says he would use executive powers to roll back burdensome regulations like those on gig workers. Kiley and Caitlyn Jenner have spoken out against a state law that allows employees to sue and recover civil penalties for labor code violations. 

Meanwhile, Democrat Kevin Paffrath, a real estate agent and host of a YouTube show on finance, has a platform of streamlined permitting for businesses.

The policy positions held by Elder and Kiley, in particular, appeal to some small business owners. They include Baret Lepejian, whose Burbank restaurant was fenced up by the city for a violation of public health orders — an allegation he denies.   

Lepejian bought Tinhorn Flats, a longtime Burbank fixture, in 2004, but he’s unlikely to reopen it, at least not in the city. Its closure has fueled his motivation to vote Newsom out.

“The one thing that I say over and over again to everyone I meet in person is that none, and I mean none of this, is about public safety,” he said. “It’s 100% about power and control, that’s what’s going on.”

Staying afloat during COVID

​​Brianna Knight, a 31-year-old Fresno resident with clients across the state, was one of the fortunate ones. Her holistic skincare business has done well during the pandemic.

The state grants helped, but so did her “overplanning” — six months ahead at some points. Before the pandemic, Knight also launched a clinical skincare line, enabling her to package at-home facial kits for her clients once COVID-19 hit. 

Despite staying afloat, Knight said she is undecided how she will vote on the recall. She said she needs to research the candidates more, and wants to see how the next phase of the pandemic goes.

“I definitely think that we need new leadership, but I don’t know if right now is the time,” she said. “And I only say that because right now California is in the purple (COVID tier) and we do foresee a possible shutdown again. So transitioning leadership right now — sometimes it gets worse.” 

Knight said she wants new leadership because of the way the pandemic was handled, including shutting down businesses that state leaders deemed non-essential.

“I do corrective skincare, so acne, so even in a pandemic, those clients are still dealing with an issue,” she said. “I think that what they considered wasn’t as important — was important to a lot of people, and we weren’t recognized.”

“I definitely think that we need new leadership, but I don’t know if right now is the time.”

BRIANNA KNIGHT, BUSINESS OWNER FROM FRESNO

Knight said the back-and-forth on closures — California started back-tracking just weeks after the June 15 grand reopening — didn’t help.

“There has to be consistency in business, to some extent,” she said. “Change is inevitable, but when it comes to things like this, I felt it wasn’t handled as well as it could have been handled.”

Federal assistance was a big help last year, added McDowell, the L.A. cafe owner, but this year, there has been less aid available. That means small business owners like him are still struggling. 

“Everyone has the sense that everything was fine again and back to normal,” he said. “And that just was never the case.”

Andrew McDowell, a small business owner of With Love Market & Cafe, rearranges the pastry case in Los Angeles, on August 4, 2021. According to McDowell, it has been a difficult task to keep his business in full operation due to the pandemic and a lack of financial assistance from the government. Photo by Pablo Unzueta for CalMatters
Andrew McDowell, who owns With Love Market & Cafe in Los Angeles, rearranges the pastry case on August 4, 2021. He said it has been a difficult task to keep his business in full operation due to the pandemic and a lack of government assistance. Photo by Pablo Unzueta for CalMatters

Cecilia Vazquez, 54, who had to close her jewelry store in the University Heights area of San Diego County for four months. But like McDowell, she doesn’t place the blame squarely on Newsom. 

“I don’t think anybody was ready. Nobody really knew what to do,” said Vazquez, whose shop was recently visited by Jenner. “We were all trying to do our best.”

Crisis on top of crisis

Thousands of small business owners across California are still trying to survive a pandemic now in its fourth surge. Even with the reopening, some restaurants and other service establishments are having trouble hiring workers — or are having to pay more and offer perks

Then, there are businesses that also have to deal with wildfires and drought.

Oakland restaurant Dragon Gate Lounge remains shuttered on Sept. 1, 2020. The establishment has since reopened for business. The Photo by Anne Wernikoff for CalMatters
Oakland restaurant Dragon Gate Lounge remains shuttered on Sept. 1, 2020. The establishment has since reopened for business. Photo by Anne Wernikoff, CalMatters

Data from San Francisco-based software company Womply showed that the deadly 2018 Camp Fire resulted in 13% of local businesses near the fire shutting down permanently, while in 2019, 6.6% of businesses closed after the Kincade Fire in Sonoma County. 

In 2020, California experienced its most destructive fire season in history, with 4.2 million acres burned. In 2021 so far, it isn’t much better. The still-burning Dixie Fire is already the second largest in state history, having blackened more than 600,000 acres in Butte, Plumas, Lassen and Tehama counties.     

Meanwhile, California is in the grip of its worst drought since 2015. This week, Newsom raised the prospect of mandatory water conservation statewide.

John Kabateck, California director of the National Federation of Independent Businesses, said opinions on the recall vary among its members, but many are too busy dealing with bigger concerns. Among them: finding qualified employees, meeting payroll and readying for a “huge spike” in their unemployment insurance taxes.

“The one thing that we have a duty to provide small business owners during difficult times — during any time — is predictability and certainty,” Kabateck said in an interview Wednesday. “Certainly the pandemic, the wildfire, the drought — all of these things, whether they are natural or man-made — are creating fear and uncertainty in your average small employer. We’re choosing to concentrate our time and resources on helping these mom-and-pops through these difficult times.”

James Long, who lives in McKinleyville in Humboldt County and owns a security services company, said he doesn’t think any governor — Democrat or Republican — would have been able to successfully navigate the many crises that hit the state.

So he’s willing to give Newsom the benefit of the doubt.

“He’d just become governor, and then this pandemic hit. Then all hell broke loose,” Long said. “Then we’ve got all these other problems, we’ve got the wildfire. Let’s not dump on the man.”