As the virus roars back, so are signs of another round of layoffs

As the virus roars back, so are signs of another round of layoffs

WASHINGTON (AP) – The reopening of Tucson’s historic hotel conference lasted less than a month.

General manager Todd Hanley ended a two-month coronavirus lock on June 4 and reopened the hotel with 39 half-capacity rooms, along with an adjoining restaurant for alfresco dining. But with reported COVID-19 cases jumping through Arizona, Hanley made the painful decision to give up last weekend.

“We’re closing everything,” he said. “We’re going to live to fight another day.”

The move means that most Hanley employees will lose their jobs again, at least temporarily. In addition to about a dozen people needed to maintain the ancient building, more than 50 workers he remembered will be fired a second time.

A revival of confirmed COVID cases in the south and west – and the suspension or reversal of reopenings of bars, hotels, restaurants and other businesses – jeopardizes hopes for an economic recovery in the region and perhaps even nationally. At stake are the jobs of millions of people who clung to the hope that their layoffs from widespread business stoppages would be short-lived this spring.

On Thursday, the government is expected to issue another strong monthly job report. Economists predict that employers added 3 million jobs in June, up from 2.5 million in May, reclaiming some of the record high of 21 million that disappeared in April at the peak of viral shutdowns.

But all this news may already be out of date: the jobs report does not fully reflect the impact of the COVID revival in the south and west and the desperate steps taken to try to control it. The re-closure of restaurants and bars, and the resulting layoffs, mark a reversal of what seem to have been premature attempts to restart the economy before the pandemic was subdued.

“We are still in a very deep hole,” said Diane Swonk, chief economist at Grant Thornton. “This makes the June employment report retrospective rather than forward looking.”

Governors in several states of the Sun Belt, who wanted to jump-start their economies, had lifted their closings before their states followed the reopening guidelines set by the White House, but were largely shaken off.

The reported infections increased rapidly. From April 9 to June 8, the five-day daily average of confirmed new cases had fallen from 32,150 to below 19,400. Then it started to rise again, rising past the April level to nearly 42,100 on Sunday before dropping to 41,000 on Monday. The number of infections is believed to be much higher because many people have not been tested and studies show that people can be infected with the virus without feeling sick.

The governors started to walk back. Texas Governor Greg Abbott closed all bars last week. Arizona Governor Doug Ducey told residents to stay at home and stated that the state was “on pause” when COVID cases piled up. Florida also banned alcohol consumption in its bars.

Kylie Davis, a 23-year-old bartender in Tampa, Florida, had returned to work on May 23 after two months without a job, struggling to collect unemployment benefits from Florida’s underserved system. The tips were good, she said.

“People were so understanding,” she said, “that we had been out of work for a while and were extremely generous.”

But after a few weeks, Davis coughed and was exhausted, losing her sense of taste and smell. On June 12, she tested positive for the virus and was unable to return to work when the Florida bars reopened. Nor, it turns out, many others could. While reported Florida cases reached a record high in the past two weeks, with 9,000 cases recorded in one day last week, Governor Ron DeSantis ordered the bars shut again.

And so Davis and others were unemployed for the second time this year.

The shocking reversal underscores what many economists have been emphasizing for months: that the economy and the labor market will not be able to regain health until business interruptions have lasted long enough to reduce infections and most Americans are confident enough to return to restaurants, bars, hotels , shopping centers and airports.

Meanwhile, a business revival and company closures are becoming increasingly apparent. The data company Womply found that the share of bars closed in Texas, Florida, Tennessee, and some other states began to rise last week after declining fairly steadily since April or early May.

In many cases, it seems that customers themselves, not the government, have driven that trend. A study by Austan Goolsbee and Chad Syverson of the University of Chicago found that Americans chose to stay at home or avoid overcrowded stores this spring, not so much because authorities charged them with fear as a result of reports of COVID deaths. Their research used mobile phone data to track consumer traffic.

“It is the virus, not the block, that determines the course of the economy,” said Yongseok Shin, an economist at Washington University and a researcher at the Federal Reserve Bank of St. Louis. “We cannot have a full economic recovery without curbing the epidemic.

He added:

“We were concerned about a second wave in the fall, but now it looks like we may have a really long wave. Now that the number of new cases is high and rising, people will slowly return to normal activities for fear of infection, and companies will postpone hiring and investment, the blockage or no blockage. ”

Even before the Texas governor closed the bars in the United States again last week, Michael Neff had decided to re-close his, the Cottonmouth Club in Houston. In March, Neff initially closed Cottonmouth and fired his 10 employees. He reopened late last month. He brought back two workers with precautions – requiring customers to wear masks other than seated, eliminating bar chairs, developing a contactless menu, and placing a barrier at the bar entrance.

It did not work. After being locked up for months, bargoers were not in the mood for social distance, especially when they could visit other bars with fewer restrictions. Cottonmouth employees spent most of their time monitoring customer behavior.

“You can’t create an environment people want to be in if you scold them all the time,” said Neff.

Then he heard bars where the entire staff had tested positive for the corona virus. Two weeks ago, Neff decided to quit on her own.

“We can’t just be a magical COVID-free zone,” he said.

Financially it was difficult. But Neff said his landlord has so far allowed him to pay what he can.

Likewise, Omar Yeephone reopened his Dallas restaurant on June 10 to “a fairly good reception,” after being closed for three months. The comeback was fleeting. After four days, Yeephone had to be turned off again in light of a revival of COVID-19 in Texas and fired two of the four workers he brought with him.

“People’s minds – they are still uncomfortable,” said Yeephone. “Psychologically, forcing this reopen and forcing everyone to go out – I don’t know how it plays out … We in Texas didn’t do this right.”

Some business people have expressed frustration at the often contradictory and evolving guidelines from government agencies and the impossible situation the virus has placed them in.

“If you open too soon, people will die,” said Dawn Nielsen, chief operating officer at Kolache Factory, which has 27 bakeries, mainly in Houston. “You don’t open fast enough and companies die.”

Kolache Factory had reopened the dining rooms for two weeks, then closed again on June 19 and returned to pick up and be delivered on its own.

The reclosures complicate the prospects for a sustainable economic recovery after the sudden and deep economic downturn in the US. Worst case scenario, economists at IHS Markit warn, after a brief upturn, that the economy could fall back into recession by the end of the year.

Economists Mark Vitner and Charlie Dougherty of Wells Fargo Securities note that the increase in reported viral cases is occurring in cities such as Dallas, Houston and Atlanta, which have caused a disproportionate share of economic growth in recent years.

“The economic recovery in the second half will be weaker and slower than we had hoped,” said Washington University’s Shin, “precisely because we have not been able to manage the epidemic as effectively as we should have.”


Loller reported from Nashville, Tennessee and Kennedy from Fort Lauderdale, Florida. AP Business Writer Tali Arbel contributed to this report from New York.

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