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Analysis

Coronavirus is hitting the Buffalo Niagara economy harder than most places

David Robinson

When a recession hits, the Buffalo Niagara region typically takes a bigger beating than most places.

This time is no different.

Job losses in the Buffalo Niagara region and across Western New York have been significantly higher than in most other parts of the state – except for Long Island – since the coronavirus outbreak started shutting down much of the economy in mid-March.

An analysis of jobless claim data released by the state Labor Department shows that nearly 61,000 people in the Buffalo Niagara region have filed claims to collect unemployment benefits since March 15.

In just three weeks, the number of people without a job in Erie and Niagara counties has more than tripled, according to The News' analysis. It's fast approaching 90,000 people.

That's enough to cause the local unemployment rate to more than triple, from just under 5% in February to more than 16% today.

"Without question, these employment numbers are telltale signs that at least Erie County is suffering a bigger hit than other parts of the state," said Julie Anna Golebiewski, a Canisius College economist.

And it's actually worse than that, because the jobless claims data doesn't immediately capture all of the people who have lost – or are losing – jobs because of the outbreak.

Some people likely haven't filed because they couldn't get through the jammed system, which has been swamped by more than 811,000 filings over the past month statewide.

Other workers were still being paid by their employers in the early days of the downturn and only now are being put on unpaid furlough. Only then are they eligible to submit a claim for unemployment benefits.

Many others are losing their jobs as their employers cut back as the downturn lingers. Delaware North Cos., which furloughed about two-thirds of its staff earlier this month, said Thursday it was making still deeper cuts. Sumitomo Rubber USA, which employs about 1,300 people locally, is preparing to close its tire-making plant in the Town of Tonawanda for at least two weeks beginning on April 20.

The job claims data shows that the Buffalo Niagara economy has tumbled to depths that are even worse than they were during the darkest days following the steel plant shutdowns in the early 1980s. Even at its worst, the local jobless rate never topped 16%.

But that also was a different type of downturn. That one was part of a structural change that reshaped the economy, The recovery took decades. With this one, many economists think it's more like what happens with a natural disaster, such as an earthquake or a hurricane.

Federal Reserve Bank of New York economists Jason Bram and Richard Deitz looked at what happened around New Orleans after Hurricane Katrina. They found that the initial spike in jobless claims didn't result in nearly as many job losses 10 weeks after the storm hit.

"This should lead analysts to think twice about assuming that every jobless claim translates into a net job loss," the economists wrote in a report Friday.

That's encouraging. For the moment, though, the Covid-19 shutdown is hitting the Buffalo Niagara region – and all of Western New York – harder than any other upstate region.

"It's much more dramatic here," said George Palumbo, another Canisius economist.

Consider:

• The Labor Department splits the state into 10 regions, and over the last four weeks, only Long Island has experienced a bigger increase in jobless claims, compared with the same period last year. Claims here are more than 16 times higher than a year ago, slightly more than New York City, which is the epicenter of the U.S. outbreak. No other upstate region, outside of the Hudson Valley, had an increase that was more than 15 times last year's rate.

 In the Buffalo Niagara region, which only includes Erie and Niagara counties, just under 12% of the people who were either working or actively looking for work have filed jobless claims since March 15. In Syracuse, that number is just under 9%, and it's 8% in Rochester. In Albany, where the high level of state government jobs acts as a cushion, the increase is just 6.5%.

 If you compare the number of jobless claims with the number of jobs, it's also clear that the blow has been worse in the Buffalo Niagara region. Here, the number of new jobless claims over the past three weeks equals 11% of our jobs. In Syracuse and Albany, it's 8.5%. In Rochester, it's 8%, all signs that the job losses here have been more severe and sweeping.

The makeup of the Buffalo Niagara economy explains some of the reasons behind the more severe hit here. Retail has been devastated by the outbreak, and it's a bigger part of the job market here than it is statewide, accounting for nearly 11% of all local jobs, compared with 9% across New York.

It's the same story with accommodation and food service, largely because of Niagara Falls and the region's outsized tourism industry. Hotels, bars and restaurants account for almost 9% of all local jobs, compared with 8% statewide.

Golebiewski also thinks the mix of occupations within the region may account for some of the harshness of the job losses here. That includes office and administrative support jobs, along with cooks and servers, manufacturing, health care support, sales and education and library services. All of those occupations are more prevalent here than nationally.

"The occupations that make up the largest shares of the local economy are those that are likely to see the most job losses in the current environment," she said.

How fast the economy opens up again will play a big part in determining how many of these jobless claims turn into temporary layoffs and how many are more lasting, or even permanent.

As Gov. Andrew M. Cuomo said this week, reopening the economy won't be as simple as a traffic light switching from red to green. There likely will be a long period under a yellow caution light, with activity gradually returning to prevent the outbreak from spiking again.

For the Buffalo Niagara region, after taking a particularly hard beating, the healing process will only be harder.

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