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David Robinson: As Covid cases rise, Buffalo Niagara job market takes a turn for the worse

David Robinson: As Covid cases rise, Buffalo Niagara job market takes a turn for the worse

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Allen Burger Venture outdoor dining

Allen Burger Venture at 72 Allen St. in Buffalo, created a patio this year so people could dine outside with Covid restrictions in place. Once the weather got cold, owner Dino DeBell set up lots of fire pits so customers could still hang out outdoors.

The Buffalo Niagara economy is heading in the wrong direction.

The region is losing jobs again, and there’s no sign yet that the latest downturn is letting up. Since mid-December, workers have been losing their jobs at a pace that is about 50% higher than the still-elevated rates when the labor market was gradually rebounding this summer.

The recovery peaked in October. Now the region’s job market is back where it was in September.

After slowly regaining roughly three-quarters of the jobs that were lost this spring when the Covid-19 pandemic hit, the region has lost roughly 6,000 jobs over the past two months as the second wave closed restaurants for the holidays and reinforced the stay-at-home mantra that further dampens discretionary spending.

When the state’s orange zone restrictions kicked in just before Thanksgiving, it sparked a new wave of layoffs at restaurants forced to stop indoor dining. That was expected.

In fact, the job cuts at local restaurants and bars over the past two months account for 9 of every 10 private sector jobs that have been lost since the recovery peaked in October, according to state Labor Department data. Many of those jobs are starting to come back now that indoor dining has resumed at limited capacity.

But the rest of the local economy is struggling, too. Over the past two months, hiring at private businesses outside of food and drinking establishments has grown by just 400 jobs over the past two months.

So bars and restaurants are hurting. But the rest of the local economy is stagnating.

It comes at a time when we’re down almost 45,000 jobs from a year ago. That’s a huge shortfall, equal to about one of every 13 jobs that existed a year ago.

That’s almost as many jobs as the roughly 48,000 jobs the region lost during the previous three recessions combined. Bouncing back will be a daunting task for a job market that took 16 years to regain the nearly 14,000 jobs that were lost during the recession that began in 2000.

“We’re still staring at a huge hole, and the question is how fast and how far we can come back,” said Fred Floss, a SUNY Buffalo State economist. “It’s taken us almost a year, and we’ve sort of bottomed out.”

The answer, of course, is widespread vaccinations, but the early rollout has been agonizingly slow and plagued by shortages.

“Until that vaccine distribution becomes more widespread and we have worked out the kinks, there isn’t going to be growth,” said Julie Anna Golebiewski, a Canisius College economist.

For now, that means the economic pain will persist.

Since the orange zone restrictions kicked in on Nov. 20, the number of workers filing for unemployment benefits – the most timely measure of the job market’s health – has spiked by more than 50%, according to State Labor Department data.

That spike was especially severe immediately after the orange zone limitations took effect, as restaurants stopped offering indoor dining just as the cold weather made outdoor dining impractical. That put thousands of servers, cooks and other food service employees out of work and ratcheted up the stay-at-home mindset that curbs other types of discretionary spending.

Restaurants are reopening now to limited capacity, but the wariness remains, and that could limit the rebound in employment.

“The pandemic is causing people to not go into restaurants,” Floss said. “There may be some who are risk-averse, but how many are there?”

So as Buffalo Niagara hunkered down, it’s likely that consumers did, too, shunning trips to the mall, eating at home and avoiding the recreation venues that are open for fear of getting sick at a time when so much attention is focused on hospital capacity and caseloads that have only recently started to plateau.

That’s causing uncertainty throughout the economy. Consumers, who have continued to spend at surprising levels during the downturn, could stop the home improvement and fix-up projects that have been all the rage during the pandemic. Business owners could lose faith that a rebound is around the corner and start playing it safe.

“The level of cautiousness has increased as government mandates have gone into effect,” Golebiewski said.

Over the past eight weeks, nearly 36,000 workers in the Buffalo Niagara region have filed for unemployment benefits. That’s as many claims as were filed during the previous 13 weeks.

On the bright side, the wave of new claims peaked at more than 6,300 during the first week in December and has averaged a little more than 3,600 a week since mid-December. But that’s still more than double the number of filings at this time last year.

The latest stimulus program will help, especially by providing an extra $300 a week in unemployment benefits. More than 20% of the local job losses have come in occupations that pay less than $27,000 a year, according to economic data tracker Opportunity Insights. The supplemental unemployment payments will help those hard-hit workers replace a significant portion of their lost wages.

It’s easy to see where the pain is. Employment at hotels, bars and restaurants is 40% below its pre-pandemic level. Retail is down 27%, even with the bump in hiring that comes with the holiday shopping season. And that gap will grow now that the holidays are over and many of those temporary store jobs have ended. Only about half of the jobs lost at the outset of the pandemic have come back in education and health services. The average weekly wage in each of those sectors is at least 10% less than the region’s average.

On the plus side, manufacturing has actually added jobs since March, and so has the construction industry. Financial services firms are pretty much back to their pre-pandemic employment levels. Those sectors all pay above-average wages.

“The burden has fallen on the most vulnerable members of the community,” Golebiewski and fellow Canisius economists George Palumbo and Mark Zaporowski wrote in a recent analysis of the region’s economy.

And for now, that burden isn’t lifting.

The Buffalo News: Good Morning, Buffalo

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