Business losses putting a squeeze on firms

Eyes of economists are on California businesses to see what’s going to happen next under coronavirus restrictions.

Economist Robert Eyler laid out a number of variables that forecasters are watching during Monday’s online “Ask the Economist” event.

At the root of much of the concern in California is if temporary layoffs or furloughs turn into permanent unemployment as businesses are squeezed between further shut- down restrictions that hamper making money on one hand to whether they can bring back idled workers because of demand uncertainty.

Then there is state government putting pressure on businesses

with more fees or higher costs. Among those concerns is California’s minimum wage hike that’s due to be installed in January. Companies with 25 or less employee will be paying $13 an hour, up from $12, and those with more employees go from $13 to $14 an hour.

Eyler said employers might see a possible delay of the hike, although Gov. Gavin Newsom said this summer that he will not delay it.

Eyler noted that California is under great pressure to increase what minimum wage workers earn to help them out under the coronavirus. Minimum wage and low-wage earners in California have been most impacted by the stay- at-home orders, which may have left them without work.

On the other hand, if businesses don’t expect demand for their services or products to return, they are unlikely to hire back these workers or might hire them back for reduced wages or fewer hours.

While Congress is still tussling over another stimulus package, Eyler seems relatively confident that some kind of assistance will come out of Washington, D.C.

Still looking at the lowwage worker, Eyler noted that economists are watching debt — especially that which was deferred, such as rent payments, student loan payments, credit card payments or taxes. If the moratorium on evictions and foreclosures is lifted in California, that could put workers in a position to need more publiclypaid services from local or county governments or put them on the streets, he noted. On the other hand, how much revenue loss can rental property owners absorb? he wondered.

Tenants are still responsible for paying unpaid amounts, but property owners can begin to recover the debt in March 2021.

Homeowners’ or renters’ inability to pay taxes could also hamper government through declines in property taxes that pay for services. Governments are also watching what happens with retail sales tax from retailers in storefronts versus those online, Eyler said, adding that the coronavirus stay-at-home orders has bolstered the inevitable shift to more online sales.

Saying he is watching California’s housing market, Eyler noted that while homeowners may retain property ownership, some have moved out of their hometowns or out of state to find employment. That could eventually lead to more homes for sale, but Eyler believes home prices will stay relatively stable. He noted housing availability has been squeezed for so long that prices shouldn’t falter much even if inventory on the market rises.

Economists aren’t looking for anything resembling “normal” until 2023, according to Eyler, who is dean of the School of Extended and International Education, and economics professor at Sonoma State University, along with president of Economic Forensics and Analytics, Inc.

Eyler’s presentation is available without charge on Chabin’s website www. chabinconcepts.com.