It is impossible to say exactly what the Buffalo Niagara economy will look like when the Covid-19 pandemic ends.
But it is certain to be very different.
The Covid-19 recession has caused deep damage to the Buffalo Niagara economy. We are still 45,000 jobs short of where we were a year ago.
But nearly a year into the pandemic, the outline of our Covid-19 recovery – whenever it comes – is peeking through the haze. And some of it could be a renaissance.
The work-from-home trend, combined with Buffalo Niagara's low cost of living, could be the best chance in a half century to keep talented young workers from leaving, bring some back home and even lure new folks here.
"There are hopeful signs that the Covid-19 recession is losing its grip on the Buffalo Niagara economy," writes David Robinson.
Financial services – the second-highest paying industry in the region – is poised to boom if the industry accelerates its spread beyond big city financial centers such as New York City. Here's a big incentive to do that: Financial services wages here, while high by Buffalo standards, are more than a third lower than the national average.
Manufacturing, the brawn that made Buffalo great in the first half of the 20th century and fueled its decline in the second half, has a chance at a Buy American binge. Pandemic shortages exposed the vulnerability of relying on overseas manufacturing. A renewed push to make products domestically will be good for local factories – if the push is strong enough.
Those are a lot of maybes. But it also means there will be new opportunities for the region – and we need to be ready for them.
The economy is always changing, even during good times. But the Covid-19 recession is accelerating those changes. And the region needs to be ready for what's next.
The work-from-home trend is a huge opportunity. Before the pandemic, we had trouble getting our talented young people to stay here, even with the region’s improved appeal as a happening place over the last few years. One reason was the undersized technology sector here. Another was that good-paying career-path jobs were easier to find other places.
Just as concerning, it’s not getting any easier for workers who want a job to find one, Robinson says.
Those often are the type of jobs that can be done anywhere. And with more work going remote – and possibly staying that way – that is an opportunity if the region can offer enough to convince those sought-after workers to do their remote work from here, taking advantage of Buffalo Niagara’s cheaper housing and lower costs than expensive places such as Silicon Valley and Seattle. That could be a huge selling point.
Financial services, long a strength of the local economy, should continue to thrive. If the pandemic spurs a long-term exodus from big cities, that could be an opportunity for less expensive mid-sized regions such as Buffalo Niagara.
That has already turned the region into a center for back-office financial services work, and the post-pandemic economy may only accelerate that. Whether the region can capitalize on that will depend on the business school graduates churned out by local colleges and the ability of those financial services firms to offer jobs that are attractive and lucrative enough to keep them here or, even better, lure others from outside the region.
“I think the one place that may very well lead us is the financial sector, with M&T Bank and some of those folks bringing back jobs from other parts of the country,” said Fred Floss, a SUNY-Buffalo State economist.
Manufacturing has held up well, but the pandemic revealed the risks that come from outsourcing so much of our production to other nations where wages are lower. The Biden administration is launching a Buy American initiative. Businesses are reviewing their supply chains after they were so disrupted so severely last spring. That could be an opportunity for local manufacturers.
Construction also has held its own during the downturn. With traditional recreation activities such as concerts and sporting events curtailed, and dining out less appealing to many, a big chunk of that discretionary spending shifted into home fix-up projects. The work-from-home push gave housebound workers a good reason to create a more comfortable and efficient home office. That trend isn’t likely to go away, which will be good for local contractors.
Change is coming. We asked a smattering of Buffalo Niagara leaders what the region needs to do to be ready for it.
Travel and tourism have been decimated, along with bars and restaurants – sectors that are heavily concentrated with small businesses whose ability to survive the recession lessens with each day.
But the end of the pandemic likely will release a surge of stir-crazy travelers. John Percy, the president and CEO of Destination Niagara USA, thinks there will be a gush of travel when the pandemic ends, but he only expects business this year to be about 60% of what it was before the pandemic.
“We don’t think of Buffalo proper as being tourism dependent, but it is, especially with Niagara Falls,” said Julie Anna Golebiewski, a Canisius College economist.
It will take time for people to get comfortable traveling again, and many are going to start out by staying within driving distance, Percy believes.
That is good for Niagara Falls, which is an eight-hour drive from an area that stretches from Chicago to Washington, D.C. and Boston. But to capitalize, it will take a stepped up marketing campaign at a time when the bed taxes that fund those initiatives are lagging badly. And other tourist areas will step up their marketing, too.
“Tourism is the most resilient industry. We are the hardest hit, the first to always be hit, but always the first to bounce back,” Percy said. “Our bed tax dollars are coming in less when we need more to be out there in the marketplace telling our story.”
The path that the recovery takes will largely depend on what happens with the pandemic.
Unemployment is up to 7.5% after dipping to 4.7% at this time last year, and local economists think it is really closer to 9%.
“Will we come back like a normal recession, where we would slowly start to come back, and then slowly pick up the pace and surpass where we’ve been?” Floss wondered.
That would be the optimistic scenario, because it would put the Buffalo Niagara economy on a well-trodden path where business gradually rebounds and steadily improves. Control the pandemic. Lift the restrictions on businesses and activities that require people to gather. Get life back to normal.
The worst-case scenario, however, is one where Covid-19 continues to mutate in ways that limit the effectiveness of the vaccines or keep caseloads from declining to a manageable level.
That would require the Covid-19 restrictions to remain in place in some form. Maybe not constantly, but maybe on an on-again, off-again basis, not unlike what local restaurants have endured with constantly changing rules that closed indoor dining, opened it back up again, then closed it back down and only recently allowed it to resume.
That kind of yo-yo rule-making makes it hard for restaurants to plan. And it can erode the confidence of other business executives, who see the rules constantly changing and wonder whether it is a safer bet to simply sit tight and ride out the pandemic, rather than make investments and plans that otherwise would be on the fast track.