As reopening gains speed, Buffalo Niagara’s recovery will be slow – The Buffalo News

The reopening of the Buffalo Niagara economy is underway and poised to take another big step as early as next week. But the recovery from the Covid-19 lockdown will take far longer.

With about one of every four jobs in the Buffalo Niagara region falling victim – at least temporarily – to the coronavirus lockdown, the hit from the shutdown here is worse than in any part of the state except the area around New York City. Nearly 115,000 jobs disappeared locally in just one month, according to state Labor Department data.

The local unemployment rate, which economists say understates the level of joblessness, spiked to a record 19.2% in April – the highest of any metro area in the state.

The number of local people filing for jobless benefits, as a percentage of the total workforce, ranks among the highest in the nation, on par with hard-hit tourist areas like Las Vegas, New Orleans and Myrtle Beach, S.C., according to the state data and researchers at the Brookings Institution.

For the Buffalo Niagara region, regaining the jobs lost during a recession has always been a big problem. It took a decade for that to happen following the 1990 recession. The region never regained the jobs it lost in the 2000 recession before the Great Recession hit. And it took four years for the region to rebound from the Great Recession – and that was one of the quickest recoveries for Buffalo Niagara in decades.

“It takes some time to regain the jobs that were lost,” said Canisius College economist Mark Zaporowski.

One of every nine jobs that vanished from mid-March to mid-April was at a store. Since then, retailers JC Penney and Tuesday Morning have filed for bankruptcy and each disclosed plans to close about a third of its stores. Pier 1 said it would close all of its stores.

Stores that had been closed were allowed to start reopening last week, but they have been limited to curbside pickup – a restriction that has kept the return of shoppers to a trickle. The reopening of retail is expected to expand in the second phase, which could start as early as next week, but state officials have yet to release details on what will be allowed and whether there will be restrictions placed on the number of shoppers.

Even then, stores that reopen will be facing a new, more difficult dynamic. With many stores closed during the pandemic, consumers have been shopping online even more. They could continue to do that even when stores reopen. Will shoppers feel safe to go back to stores and expose themselves to crowds of shoppers? Will smaller mom-and-pop stores have the resources to reopen after being closed for more than two months?

“Retail was under pressure from online shopping before this,” said George Palumbo, another Canisius economist. “That pressure will increase.”

That rising pressure, combined with the bankruptcies and shoppers’ continuing fears over the virus, means that many retail jobs won’t come back at all and those that do will return slowly.

It is the same with bars and restaurants, which are still about three weeks away from reopening under the best-case scenario. Many hotels remain closed, too. No part of the Buffalo Niagara economy has been hit harder. More than three of every five jobs at those employers vanished in just one month as the lockdown took hold. Nearly a third of the job losses across the entire region were centered in a sector that, before the pandemic, accounted for about one of every 10 jobs locally.

This is another sector that is likely to be slow to rebound. Bars and restaurants won’t reopen until the third phase – no earlier than mid-June – and only at vastly reduced capacity. That means fewer bartenders, cooks and waiters will be needed at the start. Hotels will grapple with business travel that may not return to its pre-pandemic levels, and vacation travel that is largely on hold as safety concerns and limits on large gatherings stretch into the summer.

That doesn’t even consider that many restaurants may not be able to reopen at all after being closed for more than two months and relying on takeout orders that often lack the more profitable drinks, desserts and appetizers that are make-or-break items for many establishments. And it also doesn’t consider that profit margins are so thin at many restaurants that they can’t possibly make money by operating at a quarter or half of their capacity.

For both of those hard-hit sectors, the changes in the workplace caused by the outbreak will make the recovery even harder. Many of those hotels and restaurants and shops cater to office workers, who won’t start heading back to work until early next month – assuming all goes according to plan. But some companies, like Rich Products Corp., plan to continue to allow employees to work from home into September. So is health insurer Independent Health. Another insurer, Geico, said it will be several months before its 3,000 workers are back at its Amherst customer service center.

Companies, forced into allowing employees to work from home because of the virus, have learned that productivity doesn’t take a big hit when workers aren’t in the office, as many executives had feared, said Julie Anna Golebiewski, another Canisius economist.

“I think the work-from-home model will continue,” she said.

If that happens, those reopened shops and restaurants will have to do so with far fewer of their office worker customers, making the reopening of those smaller, resource-strapped businesses much slower and their future far less certain.

“I think we’re going to see small businesses harmed more than anyone else,” Palumbo said.

And that will only prolong the recovery.

“It’s going to take a long time to get back,” Palumbo said.

— to buffalonews.com

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