Possible lockdowns leading to layoffs
Businesses brace for big changes, prepare to go lean
As COVID-19 cases surge across Florida, many businesses are starting to give up hope they can rebound with their prepandemic work forces, permanently laying off more workers.
Faced with thin cash reserves and the prospect of more government lockdowns, many are positioning themselves to be leaner for the remainder of 2020.
“Now with the specter of another major lockdown, these firms are saying it’s time to cut bait,” said Rebel Cole, a professor of finance at Florida Atlantic University.
Notices of extended layoffs and furloughs continue to pour into the state Department of Economic Opportunity from big businesses with long track records. Although Disney World is recalling some 8,000 workers to its Central Florida attractions, other large businesses in the hospitality and lodging world are extending separation times for thousands of workers.
Effective July 31, Delaware North Cos., a Buffalo, N.Y., food service management firm, is extending furloughs of more than 3,300 workers in 13 Florida cities including Fort Lauderdale, where 622 people will be affected. Rosen Hotels & Resorts in Orlando, which has been in business for 46 years, is permanently laying off 1,107 workers and placing 841 on unpaid furloughs.
“After an encouraging initial start to the recovery, the dramatic reemergence of COVID-19 risks putting the economy back on its heels,” said Mark Hamrick, senior economic analyst at Bankrate. “With the paramount aim of saving lives, renewed restrictions placed on businesses also take a renewed toll taken on the economy.”
A flood of 129,408 people in Florida filed first unemployment claims during the week ended July 11, nearly doubling the previous week’s filings.
The figure represented an increase of 62,467, an eruption that easily outstripped week-to-week claims increases by any other state. The boost broke a short string of declines as people were being called back to work. Nationally, another 1.3 million people filed claims, a slight decline of 10,000 from the week before, the U.S. Department of Labor reported Thursday.
A state-by-state list of claims increases appears to show that some fighting the virus by lockdowns are forcing the hands of cash-exhausted businesses that have no other choice but to lay off workers. Georgia and California were second and third behind Florida on the list of large claims increases. Arizona saw a modest boost, although Texas saw a decline in filings. Northeastern states that suffered outbreaks before the southern and western states saw declines in claims.
Cole said a Federal Reserve study of small businesses nationwide showed that many had less than 60 days of cash reserves before the pandemic disrupted the economy. “Without the PPP money, they would have been out of business months ago,” he said.
“Now the businesses are saying, ‘We’re just done. We’re not going to do this anymore,‘” Cole said. “If we keep the economy shut down we’re essentially going to destroy the economy.”
Jerry Haar, a professor of international business at Florida International University, suggested the pandemic “has put the coup d’ grace into marginal businesses.”
“A number of businesses that are closing, they were not in good shape anyway,” he said. “Some familyowned businesses that would have departed the scene in two to three years are now saying, ‘Why postpone the agony? I’m going to close it down now.‘”
He sees technology playing an increasingly greater role in connecting businesses with their customers. E-commerce has already had an impact, turning stores in mixed-use meccas like Miami’s Brickell City Centre into show rooms where people sample a product on site, but place their orders online.
Nationwide, nearly 33 million people were collecting unemployment benefits as of June 20, according to the Labor Department. The figure stood at 2 million people in February, before the pandemic took hold.
According to the state Department of Economic Opportunity, more than $10.1 billion in benefits has been paid to more than 1.7 million people as of Tuesday. More than $7 billion came from the federal government through a program that pays $600 in benefits a week and is set to expire next week.
U.S. Rep. Donna Shalala and state Sen. Jose Javier Rodriguez, both Democrats from Miami, on Thursday called on the U.S. Senate to pass a bill that would continue federal payouts under a tiered system pegged to state unemployment rates.
“It’s about food. It’s about rent,” Shalala said at a news conference Thursday. “The crisis is not over. It would be a calamity to cut this off.”
Although the House passed a $3 trillion relief act to continue the $600 payments, Senate Republicans have opposed an extension, with many saying that it would be a disincentive for the unemployed to seek a new job.
Joel Diaz, a laid-off technology worker who appeared at the conference, called the notion insulting.
“It’s extremely frustrating when people in Washington think people are seeking handouts,” he said. “The virus has turned the world upside down and stopped everything, but the bills keep coming.”
By the Democrat lawmakers’ estimation, hundreds of thousands of unemployed Florida workers still have not received any money since filing for unemployment after they lost their jobs this past spring due to the pandemic. According to the DEO’s own figures, 256,291 people were waiting as of Tuesday for the agency to declare them eligible for benefits.
Many lawmakers are concerned that unemployed workers will be unable to pay rent and other crucial living expenses unless the federal payments continue.
According to a survey by Bankrate, the personal finance website, more than one in three, or 36%, of American adults say they’ve delayed committing to at least one major financial milestone as a direct result of the pandemic. They include finding a new job or making a major new purchase such as a car or home. Of the people in that group, the majority postponed action for six months or more.
In addition, younger people and those whose financial situations are worse off because of the pandemic were more likely to delay their plans.