Signs on the window at Taproot Lounge and Cafe advertise takeout options while the restaurant is closed to indoor seating due to state restrictions, on Thursday, Dec. 10. (Amanda Loman/Salem Reporter)
The Salem area unemployment rate ticked up to 6.3% in December with another 1,100 people becoming unemployed. Almost all the job loss was in accommodation and food Services, part of the leisure and hospitality industry. This was not a surprise as the area was again experiencing a mandated shut-down of indoor dining and bars to stem the pandemic case increases over the holidays.
The leisure and hospitality industry has borne the brunt of the pandemic closures and job losses. What aspects of its operations were affected by the pandemic? How were other industries affected? Which industries received aid from federal programs? The federal economic statistics agency has provided a wealth of information to answer these questions.
Several hundred thousand businesses from all over the country responded to a U.S. Bureau of Labor Statistics, conducted from July through September 2020, about how they changed their operations and employment in response to the pandemic. Small, medium-sized and large businesses spanning all types of industries responded to the survey.
Survey results were analyzed for the whole U.S., each of the 50 states and for all industries and size classes. The survey covers only private sector businesses and businesses with employees (not the self-employed).
The overall news from the survey results is that most businesses were affected in some way by the pandemic. The good news is businesses that needed the most financial help largely received aid from federal programs.
First, a word about how businesses are categorized. Really small businesses, from one to four employees, are the most numerous in the Salem area (chart 1), as well as in Oregon and the U.S. They comprise nearly two-thirds of all businesses, but they employ only 8% of the area’s workers. Ninety percent of area workers work in businesses with 10 or more employees. The proportions are similar for Oregon and the U.S. In other words, most workers work for larger enterprises.
CHART 1. Businesses and employment in the Salem Metropolitan Statistical area by class and size. (Pam Ferrara)
CHART 2. Business and employment in the Salem Metropolitan Statistical Area by industry (Pam Ferrara)
In addition, the Salem area’s private sector industries are a varied mix, and no one industry really dominates (chart 2).
With that bit of background, there were at least three over-arching messages from analyzing the survey information. The most important is that more than half of all Oregon businesses (58%) received a coronavirus-related loan or grant tied to rehiring or maintaining payroll. This means that nearly 8,000 Salem area businesses across all private sector industries likely received a federal loan or grant tied to payroll.
Oregon’s percentage of businesses receiving a loan or grant was slightly lower than the U.S. average, which was 62%. Alabama and Hawaii each had the highest percentage, 67%, and Montana the lowest, at 57%.
Businesses that needed help the most received it. Seventy-seven percent of businesses in the accommodations and food services industry received a grant or loan, much higher than the average, followed by 74% of health care businesses and 70% of retail trade businesses. This translates to more than 2,000 Salem area businesses in the three industries receiving financial help from federal programs. As these industries have accounted for upwards of 90% of the job losses since the start of the pandemic, this is good news.
A second conclusion from the survey information is that a substantial portion of Oregon businesses, 45%, continued to pay employees who didn’t work because of the pandemic, and 40% of businesses continued to pay health insurance. Not surprisingly, businesses in bigger size classes did better on these two measures than smaller ones, exceeding the average by 15 or so percentage points.
The not-so-great news is that the industry that has suffered the most job losses through the pandemic, leisure and hospitality (taking in accommodation and food services) didn’t do as well when it came to paying laid-off employees and for their health insurance. The industry was well below the average on these measures, likely because nearly one-third of their businesses were in smaller size categories, making it more difficult to do so.
The third conclusion has two parts. The first is that only 18% of all businesses experienced a government-mandated shutdown (the survey counted only private businesses, so public schools are not included, private ones are). Not surprisingly, however, the leisure and hospitality industry experienced shutdowns at twice the average rate (36%). Retail trade, as well as health care and social assistance, also experienced shutdowns at higher than the average rate.
Only 19% of all businesses told the survey that the coronavirus had no impact at all on their business operations or payroll.
The survey included many more detailed questions on pandemic impacts that included whether businesses saw an increase or decrease in demand for services or products, experienced shipping problems, employee pay and telework. More information can be found on the bureau’s website.
The survey shows that the Salem area’s private sector industries, businesses, and their employees benefited from the first round of federal (and state and local) aid programs. Whether or not the aid was sufficient, and how the second round of federal aid will have an impact, only time, the course of the virus and the success of vaccination programs will tell.
One additional note: The Willamette Workforce Partnership, a local federally funded nonprofit that aids area businesses and job seekers, has received money from county and city governments over the course of the pandemic to help local businesses affected by the pandemic and the wildfires. The partnership — which works in Linn, Marion, Polk and Yamhill counties — has awarded $3.5 million to 778 businesses, in amounts ranging from $1,500 to $50,000. For more on the Partnership’s activities, visit their website.
Pam Ferrara of the Willamette Workforce Partnership continues a regular column examining local economic issues. She may be contacted at [email protected]
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