Nearly half of layoffs caused by the COVID-19 shutdown of businesses will be permanent. That’s the disturbing finding of a new study by an economist from the University of Chicago.
Millions Out of Work
Over a million Ohioans have filed for unemployment benefits since mid-March. Across the U.S. over 33 million Americans have lost their jobs since mid-March.
Even though the government announced expanded unemployment benefits, getting them has proved to be a challenge. Ohio’s Bureau of Jobs and Family Services website was unprepared for the surge in applications. The state had no system in place for distributing the extra money allocated by the federal government. So far, only about half of Ohioans have received their unemployment benefits.
While many people were able to work from home, many other businesses like restaurants were forced to furlough workers. According to this study, about half of those furloughs will be permanent.
While Ohio is opening back up, there are still strict limitations on the number of customers and what types of services can be performed. The need for social distancing limits both how many people you can serve and how many workers you can bring into a building. When I spoke to the general manager at Patties & Pints restaurant, he told me that it was “heartbreaking” to not be able to bring back his full staff.
Bright Spot
There is one bright spot. For every ten layoffs, this study finds that three jobs were created. Among the types of businesses that saw an increased demand for workers:
- Grocery stores
- Delivery services
- Medical supply manufacturers
- Online shopping services like Amazon
But other sectors took huge hits.
Hit Hard
- Hospitals and medical offices were banned from doing non-emergency procedures. That resulted in mass layoffs and even the permanent closing of some small hospitals.
- Retailers were already struggling in the age of online shopping. Many won’t survive this crisis. JC Penny filed for Chapter 11 bankruptcy protection. Gordman’s, which opened nine stores in West Virginia in March, announced bankruptcy and the closing of all stores.
- Restaurant chains like Steak n’ Shake have announced plans to permanently close multiple locations.
- Sadly, several local businesses have announced they won’t be reopening, while others have cut back on staff or hours.
Government Cuts
- Governor Mike DeWine ordered a 20% budget cut across state agencies. Hit particularly hard are colleges and universities. Many have let instructors and staff go. Some have cut sports programs and eliminated travel.
- Fair Boards, faced with no way to inspect rides due to furloughs have made the tough decision to skip this year’s fairs.
- Also, expect fallout from the 20% cut to Medicaid.
No Quick Recovery
Despite many government officials expressing hope for a quick recovery, this study says it could take a long time to bounce back. It anticipates that 42% of the layoffs will become permanent.
“If the pandemic and partial economic shutdown linger for many months, or if pandemics with serious health consequences and high mortality rates become a recurring phenomenon, there will be profound, long-term consequences. We anticipate a drawn-out economic recovery from the COVID-19 shock, even if the pandemic is largely controlled within a few months.”
That leaves us with the question, “Was it worth it?” Could the long-term economic fallout actually be deadlier than the virus? County Commissioner Mike Crabtree described figures he had seen that is could take “something like twelve years” to recover, if ever.
Economic hard times lead to suicide, health issues, domestic violence, and other threats to public health.