Carmella Carothers had no idea that March 7 would be her last day at work.
The coronavirus outbreak was just starting to spread, but the JW Marriott hotel in downtown Chicago, where Carothers had worked for 10 years as a banquet server, still had several corporate events on the books. Those quickly disappeared, and she became one of almost 800,000 workers in Illinois who lost their jobs in March and April—the sharpest decline since the state began tracking employment in the 1940s.
One out of every eight jobs disappeared after Gov. J.B. Pritzker ordered all but the most essential businesses to shut down. There has been some rebound in employment as segments of the economy reopened, but 426,600 Illinois jobs, or 7 percent, still hadn't been recovered by the end of August. That's slightly lower than the nationwide decline of 7.6 percent.
"It seems like we're at a complete standstill," says Carothers, 41, who lives in Austin. "We're being told we'll be lucky to go back to work next spring. Everything's a waiting game."
The state's economy is likely to get worse before it gets better, as federal coronavirus relief funds—such as $600 a week in extra unemployment benefits for workers or Paycheck Protection Program loans to companies—run out. Layoffs have hit hardest among lower-earning workers, who tend to spend most if not all their earnings on basic necessities, rather than salting away some money as higher-paid people can. That means their job losses will translate directly into lower spending, hurting businesses and potentially triggering more layoffs.
"The roll-off of (federal) stimulus will hit hard," says Alexander Bartik, an economist at the University of Illinois. "A lot of people will have big drops in income. A lot of people are going to be hesitant to spend. We'll see declining demand for consumer durables, some services. I'm worried about the vicious cycle."
Roushaunda Williams, a 52-year-old bartender who was laid off from the historic Palmer House hotel, which is now in foreclosure, already is feeling the impact of losing the $600 a week in extra unemployment benefits. "It was a lifeline," she says. "I've gotten a five-day notice for eviction" from her North Side apartment. "We need Congress to pass a stimulus bill."
Many small businesses aren't likely to fare much better. Bartik and colleagues surveyed nearly 6,000 of them as COVID-19 shutdowns took hold. "Sixty percent of businesses said they wouldn't be able to last six months," he says. "If a lot of firms had one to two months' cash cushion, they get some PPP money, maybe they last another three to four months. We're starting to get to that point where they run out of money."
Retailers are at risk from any hit to consumer spending, especially heading into the holiday shopping season. Retail employment already is down 4 percent since March. "Retail already was facing challenges in a good economy. There's a lot of risk of permanent closures," Bartik says.
COVID-19 has taken the greatest toll on hotels, restaurants and aviation, based on layoff notices filed with the state of Illinois. Between March and August, hotels said they would lay off nearly 19,000 workers. Airlines, car-rental agencies and caterers planned nearly 13,000 layoffs. Restaurants planned to eliminate more than 4,000 jobs.
WARN filings represent just a fraction of job losses, because not all companies are required to file them. But they reveal where, within broader industry categories, the cutbacks have been most severe.
Sam Toia, CEO of the Illinois Restaurant Association, estimates 81,000 employees in the hospitality and restaurant business are still out of work.
"That could go higher if we don't increase capacity here in the city of Chicago," Toia says of the 25 percent seating limit that Mayor Lori Lightfoot has imposed on indoor dining. "A lot of restaurants doing al fresco dining are not going to be able to do that come December or January."
He says 55 percent of restaurant operators statewide say it's unlikely they'll be in business in six months if business conditions continue at current levels.
Arts and entertainment, spanning everything from theaters to theme parks, has seen the greatest employment drop-off in percentage terms, falling 27 percent, according to the Illinois Department of Employment Security.
'THIS IS WORSE'
The travel industry, from airlines to hotels, is slowly picking up. But it's nowhere close to normal. Air travel remains down 70 percent, and airlines such as United and American are bracing for staff cuts of 25 percent or more if federal support isn't extended.
John Smith, owner of corporate travel agency Tower Travel in Hinsdale, furloughed 18 of his 21 full-time employees.
"I've been doing this for 36 years. I've seen lots of economic cycles. This is worse than all of them combined. Universities' travel has gone to zero. A couple of our customers who specialize in meetings and events, the first meetings they're planning is March 2021. We have some manufacturers doing a little bit of travel, sending technicians. It's maybe 10 percent of normal."
Bartik says the COVID slowdown is unusual because manufacturing and construction haven't been hit as hard as other industries. Manufacturing employment is down 3 percent, and construction is down 7 percent. Nondurable goods manufacturing, such as food, has seen a slight increase in jobs, according to state data. "Generally, employment loss in a typical recession is led by manufacturing and construction," Bartik says.
There are some pockets of growth, such as technology, supply chain, human resources, financial services and health care, says Tom Gimbel, CEO of LaSalle Network, a recruiting and staffing company. "Outside hospitality and travel, it's really not bad."
Manufacturing will slow if consumer spending falls, Bartik says. Already there are signs that commercial construction is slowing down as projects underway when the pandemic hit are wrapping up without new ones to take their place.
Bartik is also keeping a close eye on government payrolls, the fourth-largest source of employment in Illinois. So far, the state, Cook County and the city of Chicago have avoided layoffs. But Pritzker last week directed state agencies to prepare to cut their budgets 5 percent this year and 10 percent in the fiscal year starting in July. Mayor Lori Lightfoot, facing a historic budget shortfall, has indicated that layoffs are likely.
"State and local spending cuts are a force that's been underrated," Bartik says. "There's still a chance there will be federal support. If there's not, state and local government will have to cut. They have had a big hit to tax revenue."
Those already out of work face a weakening job market. Carothers, the banquet server laid off from the JW Marriott, survived the 2008-09 recession but is worried now. "The difference was, you might not be able to get a job in your field, but you could get a job," she says. "Now it's like there's nothing—it's just dry. I had no idea I'd be in a worse situation 10 years later."
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