The new year arrived with a new job for Tyler Simon, who had high hopes for 2020. They didn’t last long.
“Once Covid-19 hit, things went from bad to worse really quick,” said Simon, a father of two in Summerfield, North Carolina.
A marketing specialist with a sales-training company, Simon lost his job along with several colleagues on April 7 -– less than two weeks into a state-wide lockdown to counter the pandemic. He says many who survived the firm’s layoffs saw their pay cut by 10%.
That’s happening all over the country.
A tsunami of job losses, which began among workers in restaurants, hotels and factories, is now reaching the offices of white-collar America — where analysts and engineers find themselves among the rapidly swelling ranks of the unemployed.
Within a month, some 22 million people filed for jobless benefits, in what’s shaping up to be the worst rout for U.S. labor since the Great Depression. Data due Thursday is forecast to show another 4.5 million joined the line last week.
This economic downturn is turning out to be far deeper and far more severe than most experts were originally anticipating. More than 22 million Americans have filed claims for unemployment benefits, and economists are telling us that the U.S. economy is contracting at the fastest rate that we have seen since the Second World War.
We are already starting to see some high profile companies move toward bankruptcy, but the real story is what is happening to thousands upon thousands of small and mid-size businesses because of the lockdowns. Many of them were barely surviving even before this pandemic, and now these lockdowns have delivered a death blow.
The restaurant industry is a perfect example. Prior to the pandemic, there were more than a million restaurants in the United States, and about half of them were independent. Those independent restaurants employed approximately 11 million workers, and now the vast majority of those workers have been laid off.
Once the lockdowns are over, it would be wonderful if all of those independent restaurants would spring back to life, but the results of a recent survey suggest that simply is not going to happen. In fact, that survey found that 28 percent of all independent restaurants are probably not going to survive if the lockdowns last for another month…
A survey released Thursday by the James Beard Association found independent restaurants laid off 91% of their hourly employees and nearly 70% of salaried employees as of April 13 – double-digit increases in both categories since March. The poll of 1,400 small and independent restaurants found 38% of have closed temporarily or permanently, and 77% have seen their sales drop in half or worse.
Perhaps most troubling: 28% of restaurants said they don’t believe they can survive another month of closure, and only 1 out of 5 are certain they can sustain their businesses until normal operations can resume.
28 percent of 500,000 is 140,000, and so if these lockdowns are not lifted soon we could be facing a scenario is which tens of thousands of independent restaurants are lost forever.
Of course a lot of restaurants that do reopen will face a really tough struggle because fear of the coronavirus is going to keep customers away for the foreseeable future. So even if all of the lockdowns were lifted tomorrow, the restaurant industry would still not fully recover.
Sadly, the same could be said for the fitness industry. In fact, we just learned that one of the biggest fitness chains in the nation is getting ready to file for bankruptcy…
Across the country, state and local governments are clamoring for the federal government to rescue them from what could quickly become a fiscal catastrophe, saying that they may need as much as three-quarters of a trillion dollars as the coronavirus pandemic dries up many of their revenue sources.
Though Democrats sought to include roughly $150 billion in funding to state and local governments in the latest coronavirus aid package, set to pass this week, it did not make it into the final bill. Already, Congress approved $150 billion in funding for state and local governments as part of earlier coronavirus legislative aid — assistance governors and local leaders said would ultimately not be enough.
A Congressional Research Service report last week on initial coronavirus aid said that “early evidence suggests that the COVID-19 economic shock will have a notable impact on state and local budgets,” pointing to the “sizable share of economic output” that derives from state and local governments.