What Is Just Compensation?


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With every major county in the United States under quarantine, some people have started asking what right the government has to force businesses considered “non-essential” to shut down. Many have pointed to what is called the “takings clause” of the 5th amendment. The clause states that “private property (shall not) be taken for public use without just compensation”. The argument for closing small businesses is that the government is temporarily utilizing eminent domain for the “public use” of keeping everybody away from that business.

If the government is using 5A to temporarily shut down small businesses, the question is what warrants “just compensation” in these situations. Congress was finally able to pass a stimulus bill worth two trillion dollars, but small businesses seemed to be put on the backburner. Small businesses were benefited in just two ways. First, the wage tax employers are required to pay each year will be delayed and distributed over the next two years. Second, a large fund was made available to be given out as loans that could be potentially forgiven at a later date. The problem with these loans is that there is some uncertainty on what will be forgiven and what will not. A small business owner will be very hesitant to be $10,000 in debt to the government when there is so much uncertainty around the future of their business. In short, the bill did little more for small business owners over the general population. Surely a $1,200 check pales in comparison to the revenue generated by many small businesses over the course of a month or so, but I am even more concerned with the long-term costs of these shutdowns.

Many small businesses will be required to close their doors for good if they remain shut-down for more than a month. A person’s source of income being permanently removed due to this government shut-down makes it obvious that these small business owners are not being anywhere close to justly compensated. What are these entity owners to do then? The easy answer is to open your doors back up and begin doing business. Of course, each business should take precautions to encourage social distancing, but doing business under these strange conditions is far better than doing no business at all.

Local authorities will be required to take action against business owners who break the law by opening during this time, but for the reasons mentioned above, I think a lawsuit against the state for violating the fifth amendment will be successful and will be a huge step towards helping the nearly 50% of the US population employed by small businesses be justly compensated for the potential long-term loss they face during this crisis.

One Response

  1. Yes – exactly! But I wouldn’t count on judges actually enforcing the Constitution. I’ve already made your exact argument on social media, and 90% of the comments insult me as a selfish, money-grubbing idiot and moron who’s more concerned about my stock portfolio than people’s lives – as if massive unemployment on a scale never before seen will somehow not have adverse health affects on much of the population. A guest on a Hoover Institution Uncommon Knowledge video said, “mankind is fallible, and politics trumps intellect.” So true – and that idea will be true if/when the 5th amendment challenges play out in court.

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